How to Record a Promotional Gift With Purchase (GWP) Campaign
Expensing the cost of a free promotional item given to customers who spend above a threshold.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Marketing Expense — GWP | Expense (+) | 8.00 | - |
| Merchandise Inventory (GWP Item) | Asset (-) | - | 8.00 |
💡 Accountant's Note
The promotional gift is removed from inventory at cost and expensed as a marketing cost. No revenue is recorded for the free item.
Practitioner & Systems Framework
💻 ERP Architecture
Set up GWP items as a separate SKU in the inventory system so they can be tracked and allocated to the marketing campaign. When a qualifying purchase is made, the GWP item is issued via the POS as a zero-price item linked to the campaign code. The inventory system reduces GWP stock and charges the cost to Marketing Expense. Track GWP item consumption vs. campaign sales volume.
⚠️ Audit Flags
For VAT purposes, giving away free items may constitute a deemed supply — output VAT may be due on the cost value of the GWP item in Jordan. Confirm the VAT treatment with your tax advisor. Auditors will also check that GWP inventory is properly controlled and that items are not issued without a qualifying qualifying purchase.
📄 Required Documentation
GWP campaign approval and terms (qualifying spend threshold, GWP item, campaign dates), GWP inventory movement log, Marketing Expense — GWP ledger, VAT deemed supply assessment for free goods, and campaign effectiveness report (sales volume vs. GWP cost).
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.