exchange of products or services by two companies without cash involvement. The companies contract for a specified amount of the items and the proportions representing full payment. For financial reporting purposes, barter transactions should be reported at the estimated fair market value of the product or service received. This same requirement holds for tax purposes in that each party has to recognize as revenue the fair value of the exchange. For example, a barter takes place when an accountant renders services to a computer store in exchange for a personal computer.
trade of goods or services without the exchange of cash, checks, or another form of monetary payment. A barter system functions as a local currency system for exchanging products of comparable value. Barter trading facilitates import-export commerce by less-developed countries lacking hard currency reserves through a form of barter known as counter-trade.
trade of goods and services without use of money. Income from a barter transaction is taxable income.
trade of goods or services without use of money. When money is involved, whether in such forms as wampum, checks, or bills or coins, a transaction is called a sale. Although barter is usually associated with undeveloped economies, it occurs in modern complex societies. In conditions of extreme inflation, it can be a preferred mode of commerce. Where a population lacks confidence in its currency or banking system, barter becomes commonplace. In international trade, barter can provide a way of doing business with countries whose soft currencies would otherwise make them unattractive trading partners.
system of trading goods and services for advertising time or space. Long before broadcast advertising came into being, hotels would offer transferable documents claled "due bills," each of which had the value of one day's stay per room, to newpapers and magazines in return for advertising space. The newspapers or magazines would then use the due bills for their own personnel or sell them at a discount to anyone desiring a reduced hotel rate. The cost of the advertising space was figured on the basis of the net price of the due bills. In other words, if the rate card for the advertising space was $20 per column inch, and if the hotel rooms were rented at $20 per day, but the due bills each sold for $10, the barter arrangement would be at a rate of two-to-one, or two due bills for each column inch of space.
In the early days of radio, cash was tight and studio needs often exceeded budgets; thus, much advertising time was sold through barter. This system continues today throughout the broadcast industry, and barter has become a highly competitive business. There are companies called barter brokers, who handle only barter business. There are also companies who have become wholesalers of broadcast time by building inventories of time accumulated through various barter situations (called barter time).
