[Question] Barter transaction

[Jane123]

Hi there!

What is the correct accounting practice to record barter transactions? I know vat definitely needs to recorded!

Thanks

[HR Solutions]

Why would vat definitely need to be recorded ?

[Jane123]

Apologies for my ignorance on the matter but this is why I am posting- from what I have managed to read up, barter transactions must be subject to tax.

[HR Solutions]

Oh I was under the impression that you had to hit the 1mil mark first

[Dave A]

My suggestion is invoice your supply to the other party as you normally would, and capture the bill from the other party as you normally would. Then receive payment for your invoice and make payment for the other party's bill from a contra account.

This way the exchange of value is properly accounted for by both parties without the actual funds exchanging hands.

[Jane123]

Thanks so much Dave! That's how I ended up doing it- we just agreed on a fair value price to each invoice but was just wanting to double check all was in order as one reads so much about dodgy barter deals and one doesn't want to end up doing the same unbeknownst... Appreciate the help!