Century is considering whether it should recognize revenue related to this arrangement with STE on a gross or net basis. Analyze the following questions on the relevant authoritative literature (Accounting Standards Codification) and discuss the support for your conclusions. 1) What are the accounting issue(s) and relevant components of the literature, using CenturyTel as the entity? 2) Should CenturyTel (as a principal) recognize revenue as gross for the amount billed for STE to the customer or net (as an agent) for the net amount retained by CenturyTel? 3) What journal entries are necessary to account for each minute a customer uses the 1-900 number?

CenturyTel Corporation is a public company using a calendar year for reporting purposes. CenturyTel provides telecommunication services to various different consumer groups. CenturyTel has contracts to route calls to several customers in the business of environmental protection. In October, 2012, a new fortune telling provider, Saving the Environment (STE) becomes a customer of CenturyTel Corporation. When CenturyTel receives a call made to a certain 1-900 number, the call is routed to one of CenturyTel's customers in the environmental protection group, depending upon which company is available. When the call is routed to STE, STE employees handle the call. The arrangement between CenturyTel and STE is such that the caller is charged $5 per minute, by CenturyTel, for each call received at the 1-900 number. The customer's invoice notes which member of the environmental protection group received the call. Calls handled by STE will be noted on the customer's invoice. Of the $5 charged by CenturyTel, $4 is remitted to STE by CenturyTel for each minute of the call. If the customer does not pay the $5 per minute, their agreement requires CenturyTel to pay STE the $4 per minute for the call anyway. All marketing for the environmental protection group services are performed and paid for by STE. CenturyTel is noted mentioned in STE's marketing campaign. As calls are received and routed to STE, the consultant is introduced as an \"environmental protection consultant with STE.\" REQUIRED: Century is considering whether it should recognize revenue related to this arrangement with STE on a gross or net basis. Analyze the following questions on the relevant authoritative literature (Accounting Standards Codification) and discuss the support for your conclusions. 1) What are the accounting issue(s) and relevant components of the literature, using CenturyTel as the entity? 2) Should CenturyTel (as a principal) recognize revenue as gross for the amount billed for STE to the customer or net (as an agent) for the net amount retained by CenturyTel? 3) What journal entries are necessary to account for each minute a customer uses the 1-900 number