Question: The fact that the sale is for 50% less than fair value raises the question of the amount of revenue to be recorded. Even though the market price of the handset is $160, the amount receivable from the distributor is $80 - therefore this is the amount to be recognized as revenue. On the 12-month contract, Telco Ltd records the gross amount received from the customer as revenue over the period of the contract (because the distributor is its agent) and records the commission as a cost of sale