A finished ACC-685 Topic 3 principal agent presentation analysis example, sorting 38,000 orders by fulfillment model, finding control in the drop-ship orders and presenting them gross with disaggregated margins. Searches like "acc 685 topic 3 assignment example", "acc685 topic 3 sample" and "acc-685 topic 3 example" land here.
What a finished ACC-685 Topic 3 principal agent presentation analysis looks like
Order data opens the finished analysis, all amounts illustrative: 38,000 orders worth $184 million, split among the company's own warehouse stock at $62 million, drop-ship orders filled by independent dealers at $71 million, and listings where dealers sell directly and pay a 12 percent commission, $6.12 million on $51 million. The first and third models settle quickly, gross and net. The drop-ship model is the judgment. The company sets the price, promises delivery, accepts returns and absorbs the loss when a dealer refuses one, which the analysis reads as control of the equipment before transfer. Presented gross, revenue is $139.12 million at a 27.0 percent gross margin; presented net, $80.90 million at 46.4 percent. Gross profit is $37.50 million either way.
How an ACC-685 Topic 3 example is structured
The analysis is organized around the one model that could go either way. It begins by stating the unit of account, the specified good in each order, because control is assessed for that good and not for the platform. An order-data section explains how the 38,000 orders were classified, from fields recording who set the price, who shipped and who took the return. The two settled models follow in a paragraph each. The drop-ship section applies the control principle first and then the indicators, primary responsibility for fulfillment, inventory risk and pricing discretion, stating where each points and how much it weighs. A presentation section sets both income statements side by side. The rejected net presentation is then argued at its strongest. The analysis closes with the revenue disaggregation and margin disclosure that let a reader compare the company with pure marketplaces.
The specified good named first
Control is judged for the equipment each customer orders, so the analysis defines that good before asking who controls it, rather than asking what the platform does.
Order fields that sort the models
Price-setter, shipper and return handler are read from every order record, which is how $184 million divides into three models without sampling a single contract.
Drop-ship control tested against indicators
Pricing discretion and responsibility for fulfillment point to the company, inventory risk points partly to the dealer, and the analysis explains why the returns obligation tips it.
Two income statements side by side
Revenue of $139.12 million or $80.90 million, with identical $37.50 million gross profit, shows readers what the presentation choice changes and what it leaves alone.
The net reading argued before rejection
The company never owns drop-ship stock before an order arrives, and the analysis grants that fact its weight before showing why control still passes through the company.
Disaggregation that restores comparability
Revenue and margin by fulfillment model let a reader set the company beside pure marketplaces, which report commissions only and would otherwise look far more profitable.
Where marks go in ACC-685 Topic 3
Deciding gross or net from the business model's label, 'we are a marketplace', is the weakest answer this analysis sees, because the guidance asks about control of each specified good. Papers that list the three indicators and count them skip the control principle the indicators exist to support. Treating the drop-ship orders as agency sales because the company holds no warehouse stock reads inventory risk as decisive when it is one indicator among several. The reverse error presents everything gross, commissions included, and inflates revenue by $44.88 million of dealer sales the company never controlled. An analysis that settles the classification and never shows the two income statements hides what the choice does to margin. Missing disaggregation leaves users unable to compare the company with anyone.
Get an ACC-685 Topic 3 example written to your instructions
Send the ACC-685 Topic 3 instructions, your classroom rubric and the transaction or company facts your case provides. A custom example is written to them, with the specified good defined, control assessed before the indicators, both presentations shown, the rejected alternative argued fairly and disclosure drafted, in 24 to 48 hours. The first one is free.
ACC-685 Topic 3 questions, answered
What decides whether a company is principal or agent?
Whether it controls the specified good or service before it is transferred to the customer. ASC 606 offers indicators of control, such as being primarily responsible for fulfilling the promise, bearing inventory risk before or after transfer, and having discretion in setting the price, but they support the control assessment rather than replace it. No indicator is decisive alone, which is why the drop-ship model needs argument.
Does presentation change profit?
Not gross profit or net income. A principal reports the full amount the customer pays as revenue and the cost of the goods as expense; an agent reports only its fee or commission. The difference shows up in revenue, gross margin percentages and any metric built on revenue, which is why a reader comparing the company with a pure marketplace needs the disaggregated figures.
Could the company present drop-ship orders net to look like a marketplace?
Not as a matter of preference. Gross or net follows from the control assessment, and a company that controls the goods reports revenue gross whether or not it would like marketplace-style margins. Where facts differ across order types, the assessment is made for each, which is how one company can report both ways. The analysis records the facts so the conclusion can be revisited if the returns policy changes.