Ireland Accounting for free inventory as form of payment

[FC27]

Hi All,

If I’m receiving inventory as form of payment what is the correct accounting treatment.

I’m thinking
Debit inventory balance sheet
Credit revenue

To the value of the cost.

Would like to get other opinions

Thanks

 

[vpryce]

The entry you posited is correct. However, these are things to look out for:

1. The inventory received, is at FMV and equal the value owed.
2. Does the transactions fit the Arms-length criteria.
3. Tax implications as to when revenue is generated, and inventory is actually sold.