USA Sales Allowance or Marketing Expense


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As a consumer goods product manufacturer, what is the correct way of recording "new store allowances" in our books: do we call these sales allowances, which reduce our sales income, OR do we call these marketing expenses, which allows us to show higher top line sales?
I ask which is correct, because they yield the same net income, but due to some of our business partnerships, it would be more beneficial for us to classify these as marketing expenses -- IF it does not violate GAAP.
 
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kirby

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One way to get an answer is to ask your CPA firm. The downside of this is A) you will be billed for their research time and B) you may not like the answer, and now you're stuck.

Another way to go is to establish a clear written policy on the issue. In this case, policy should state (for example) 1) Sales allowances are to reduce the cost of goods that were damaged while 2) new store "promotions" (don't use "allowances") are to be recorded as marketing expense 1) when the promotional goods are shipped to the new store and 2) a store is considered "new" for only x period of time.
Better yet - make the sales allowance policy and the promotions policy two separate policy statements so there is no linkage.
 

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