USA Expensing of Product Samples


Joined
Apr 2, 2019
Messages
1
Reaction score
0
Country
United States
Product Samples (very large $ amount) will be provided free of charge to a customer who will then create their own sample book. Sample book will be owned/controlled by the customer. Future customer orders over the next 2-3 years should be generated from these customer created sample books, but no orders are guaranteed nor is their a contract specifying minimum order requirements.

In my opinion the samples should be expensed in the month in which they are provided as no specific future revenue can be matched to the specific sample expense. Client is pushing to expense the cost evenly over the next several years which I don't believe is the proper US GAAP handling of the expense.

Your thoughts?
 

kirby

VIP Member
Joined
May 12, 2011
Messages
1,621
Reaction score
218
Country
United States
“So I can spread the cost evenly” per the client is not GAAP. Principle of conservatism holds here. Says if unknown if there is a future benefit then expense it now.
 
Ad

Advertisements

bklynboy

VIP Member
Joined
Oct 12, 2011
Messages
568
Reaction score
105
Country
United States
I kind of see these samples as sales materials no different than brochures. may be a stretch but if viewed that way - meaning they are prepared for salespeople to use to solicit sales - then there is gaap guidance I thought that allows these to be hung on the balance sheet when costs are incurred to develop the sample. Once they are given to the agent they should then be expensed. Practically it is easier just to expense right away instead of keeping track of what is on hand but depends on how much these cost. did not spend the time but look up gaap guidance for marketing costs and I think it will jive with what I have explained.
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Similar Threads

Samples or Moldy products 4
Accounting for Sample Products 1
Quickbooks and Product Samples 2
How to handle consignment/sample items (products) 1
UK Sample Requisition 0
Sample code 3
Sample database 2
Sample Database 1

Top