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Accounting for services recieved for free?

A/c entries 641 views 1 replies

what entry can we probably have for services that we have recieved from an entity without any cost...???

for example if legal counsel has provided us services which are revenue in nature without any charge or any expense for that matter like printing or stationary has been given to us without charging anything...

 

shall there be an entry for this...and if so what shall be the entry be?

 

 

thanxx in advance

Replies (1)

Notional incomes and expenses are not recorded as per GAAPs

Money measurement concept- Events or transactions are measured in terms of money. Those events/transactions which can not be measured in terms of money are ignored.

 

If non monetary asset is received like land/plant etc should be recorded @ nominal value.

In case of depriciable assets

For presentation grant may be capitalized and asset can be recorded at nominal value and then writting off the grant per financial period (this way the grant is recognised in the profit and loss statement over the useful life of depreciable asset by way of a reduced depreciation charge)

 

Other alternative would be to recognize it as defered income which is recognised in the profit and loss statement on a systematic and rational basis over the useful life of the asset.

 

Stationary is not very material but still it is a resource controlled by the entity and should be recorded, It should be recorded at notional value say Re1.

 

Lets see what others say


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