Company A was offered free advertising at no cost. Services are non-transferable. All advertising must be co-branded and approved by Company B. How do you recognize the free advertising received in Company A's books?
Recognize free advertising received from a vendor
Answers
This is primarily an issue that not-for-profit entities have to face. Standards state that the services are recognized if they are "specialized". Meaning that it is not something average person is capable of doing. If you did recognize the free advertising the entry you would make is:
Debit: Advertising Expense
Credit: Contributions Revenue - Contributed Services
However, in order to book it you do need to calculate the "fair market value" of the free advertising.
Filed Under:
Accounting