How do you account correctly for bartered transactions?

When accounting for barter entries, enter the

amount of revenue and expense recognized from each barter transaction on the Income Statement
during the period that the barter occurred.

Clearly label all barter income and expense transactions in QuickBooks. In addition, clearly mark all
supporting documents pertaining to the barter transaction such as the sales receipt, invoice and barter
exchange statement. This will support the fair market value used in accounting for the barter
transaction.

The annual fair market value of barter transactions is reported on the "Proceeds from Broker & Barter
Exchange Transactions" line on Form 1099-B. According to the IRS, "The fair market value of goods and
services exchanged must be included in the income of both parties."

Example (1): A doctor performs a medical visit in exchange for an accountant’s tax return prep.

Report:

Debit: Accounting Expense xxx

Credit: Medical Income xxx

(at the determined fair market value of the accounting services received)

Example (2): A fitness trainer performs physical training in exchange for (personal) dental work.

Report:

Debit: Owner’s Draw xxx

Credit: Fitness Income xxx

(at the determined fair market value of the dental work provided)

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the comments below!