[Question] How Do I Post a BARTER

[Karen Mitchell]

Does anyone know how to properly post a Barter?

In this particular situation, my client is trading $35,000 in advertising material for $35,000 in airconditioning equipment/work on a newly leased building. How should this be recorded?

Thanks for your help

[Rebecka Melson]

According to the IRS barters are considered cash exchanges and you record them the same as you would if you had bought/sold the materials normally and the FMV of the items have to be recorded as income by both parties.

The only real difference I see here is that the advertising materials to the recipient probably won't be a capitalized item but the HVAC materials will be a capitalized item to its recipient and will have to be depreciated so the recipient of the HVAC materials will initially have more taxable income than the other party (unless he takes a 179 deduction).

[Karen Mitchell]

So in QB's I would record the HVAC as a capitalized expense and the advertising as A/R tied to the barter bank account?

Thank you - you are an awsome resource and co-VA!

[Rebecka Melson]

In QuickBooks, I would create an invoice for the advertising materials the same as you would bill any customer. Then, I would create a Credit Memo to "pay" the invoice and code the Credit Memo to the Asset account "Equipment".

After you apply the credit memo to the invoice it will post the payment to the income account as well as the Equipment account.

[Karen Mitchell]

Okay. You are my hero. I so appreciate you are always there willing to help.
Thank you!
Karen

[vmhtemp]

I love that we can ask bookkeeping question here and get answers. That helps me with confidence to go forth with my business. Thanks all!!