The way to book a corporate barter transaction has changed over the years since I first started publishing BarterNews. Below, outlined in bold print is a succinct method to follow. I’v reprinted from the BarterNews archives the story about Wickes…

Wickes, Inc., a leading supplier of building materials in the U.S. which operates building centers in 24 states, recently reported that they are restating a transaction which was established in the 3rd quarter of 1998. Annual sales approach $1 billion.

Management indicated they are following generally accepted accounting principles in every aspect of their business, including the accounting treatment for an inventory barter transaction.

Below is a synopsis of the statement by the company on how the barter transaction will be recorded on their books:

“Accounting for the inventory barter transaction was established in the third quarter of 1998 when inventories with an original purchase price of $1.6 million were exchanged for $1.6 million in trade credits.

“A $400,000 inventory markdown reserve was netted against the transaction and the trade credits were originally established as a $1.2 million prepaid expense.

“The company now believes the barter credits should have been recorded at a net book value of $350,000, which will result in recording the barter transaction benefit as the trade credits are utilized.”

Editor’s Note: The above accounting treatment of corporate barter trade credits is in line with the Financial Accounting Standards Board EITF 93-11 ruling, “Accounting for Trade Credit Transactions.” A full report on the FASB 93-11 ruling is found in the BarterNews FastStart Corporate Barter Program. (Consulting with Bob Meyer is available, see email under photo top right of site.)

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