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Prior to the adoption of ASC 606, ASC 920-845-30 requires radio and television broadcasters to use fair value of the product or service received in reporting certain exchanges (bartering) of unsold advertising time for products or services. For barter transactions involving the exchange of advertising for advertising, ASC 605-20-25-14 through ASC 605-20-25-18 states that revenue and expense should be recorded at the carrying amount of the advertising surrendered, which is usually zero. However, the advertising revenue and expense should be recorded at fair value if the value of the advertising surrendered in the transaction is determinable based on the entity’s own historical practice of receiving cash, marketable securities, or other consideration that is readily convertible to a known amount of cash for similar advertising from buyers unrelated to the counterparty in the barter transaction.
ASC 920-845-30 was superseded by ASU 2014-09. Therefore, upon adoption of ASC 606, judgment may be required to account for advertising barter transactions. Entities will first need to assess whether the arrangement is a contract with a customer, including whether the arrangement has commercial substance. Whether the barter is with a customer or noncustomer, income is recorded based on the fair value of any noncash consideration received from a counterparty, which could include advertising. The fair value of noncash consideration is measured at contract inception.
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