How to Record Unallowable Entertainment
Accounting for entertainment costs that are strictly unallowable under FAR 31.205-14 and must be segregated in the books of account.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Unallowable Entertainment Expense | Other Expense | 1,200.00 | - |
| Accounts Payable | Liability | - | 1,200.00 |
💡 Accountant's Note
FAR 31.205-14 prohibits the reimbursement of entertainment costs. These must be recorded in a unique account code that is excluded from the indirect cost pools during the overhead rate calculation.
Practitioner & Systems Framework
💻 ERP Architecture
Set up a separate '9000-series' or similar account range in the Chart of Accounts to flag unallowable costs automatically.
⚠️ Audit Flags
High frequency of transactions in unallowable accounts during DCAA incurred cost audits.
📄 Required Documentation
Invoices, attendee lists, and business purpose to justify segregation from allowable marketing or travel.
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Expert Analysis by Qusai Ahmad
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