The statement that is reasonable is: "UpHigh Inc. provides a right to fly (i.e., a plane ticket) to Mrs. and Miss. Madden from Perth to Buenos Aires, with a Air Bound Inc. connecting flight in Auckland. UpHigh Inc. must consider the principal indicators to determine whether it is a principal or an agent for the connecting flight."
In the context of providing flight tickets, the determination of whether a company is acting as a principal or an agent depends on various factors, such as whether the company has control over the services provided by the other airlines, the level of discretion it has in setting prices, and the assumption of inventory risk. In the examples given:
- For On Time Airways Ltd., the statement suggests that it doesn't control the connecting flight with Aviators Inc., but this doesn't automatically classify it as an agent; further evaluation of the principal-agent indicators is still needed.
- Always Air Inc. being the principal for its own flight doesn't necessarily mean it's an agent for the connecting flight with Happy Heights Air Ltd.; again, a proper assessment of the principal-agent indicators is necessary.
- Honest Air Inc. controlling the plane ticket doesn't definitively make it a principal for the entire journey; the assessment of the connection with US Flights would still require the same evaluation.
In summary, the determination of whether a company is a principal or an agent in these scenarios requires a thorough analysis of the nature of the relationship between the companies involved, as per the relevant accounting standards.
