What was the accounting change in recording slotting allowances?
The Emerging Issues Task Force of the Financial Accounting Standards Board issued rule 02-16 which requires retailers to record vendor allowances as part of the cost of goods sold then the products are actually sold to the consumers. This concept makes sense because it matches the allowance with the revenue. The SEC rule does not specifically address how certain types of payments like slotting fees should be accounted for, but a good approach is to recognize them as the products are sold instead of recording them when the products are introduced. The funds that come in, as reimbursement for advertising will be credited to the cost of goods sold, and recorded when the merchandise is sold.
