Revenue Recognition (Auction and Related Revenues)  Sotheby s Auction segment functions principally as an agent by offering authenticated works of art for sale at auction and by brokering private art sales. Sotheby s principal role as an agent is to stimulate buyer interest through professional marketing techniques and to match sellers and buyers through the auction or private sale process. Prior to offering a work of art for sale, Sotheby s experts perform significant due diligence activities to authenticate and determine the ownership history of the property being sold. The principal components of Auction and Related Revenues are: (1) auction commission revenue, (2) private sale commissions and (3) principal activities. The revenue recognition policy for each of these is described below. (1) Auction Commission Revenue  In its role as auctioneer, Sotheby s represents sellers of artworks by accepting property on consignment and by matching sellers to buyers through the auction process. Sotheby s invoices the buyer for the purchase price of the property (including the commission owed by the buyer), collects payment from the buyer and remits to the seller the net sale proceeds after deducting its commissions, expenses and applicable taxes and royalties. Sotheby s commissions include those paid by the buyer ( buyer s premium ) and those paid by the seller ( seller s commission ) (collectively,  auction commission revenue ), both of which are calculated as a percentage of the hammer price of the property sold at auction. On the fall of the auctioneer s hammer, the highest bidder becomes legally obligated to pay the full purchase price, which includes the hammer price of the property purchased plus the buyer s premium, and the seller is legally obligated to relinquish the property in exchange for the hammer price less any seller s commissions. Auction commission revenue is recognized at the time of the auction sale (i.e., when the auctioneer s hammer falls), which is the point in time when Sotheby s has substantially