Accounting For Google Play Revenue

Record 100% of the revenue. The 30% transaction fee, in my opinion, is an operating expense. To make cash reconcile to the statement, the entry would be a credit of $50 to revenue and a $15 debit to the applicable expense account. The difference of $35 will be what gets debited as cash.

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There is detailed guidance as to whether an entity should report revenue gross or net of certain amounts paid to others in GAAP (ASC 605-45). The guidance provides lists of "Indicators of Gross Revenue Reporting" and "Indicators of Net Revenue Reporting." The determination of net vs. gross presentation (i.e., agent vs. principal) is very dependent on your specific facts and circumstances, including the terms of your agreement with Google. There is no "bright line" test but rather a requirement to weigh the various indicators and apply judgement.

FWIW, Google discloses in its 10-K that "For the sale of certain third-party products and services, we evaluate whether it is appropriate to recognize revenue based on the gross amount billed to the customers or the net amount earned as revenue share. Generally, when we are primarily obligated in a transaction, are subject to inventory risk or have latitude in establishing prices, or have several but not all of these indicators, revenue is recorded on a gross basis. We generally record the net amounts as revenue earned if we are not primarily obligated and do not have inventory risk or latitude in establishing prices. Such amounts earned are typically determined using a fixed percentage, a fixed fee, or a combination of the two." In other words, Google is applying the guidance in ASC 605-45 and their conclusion varies based on the specific facts and circumstances, so you can't simply say, for example, "Google is recording revenue net as agent, therefore we should record it gross as principal."

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