@dshatto
IMO, the QB article on in-kind asset donations is incorrect. When you receive donated items for an auction, they should be received on a sales receipt with an in-kind donation item mapped to an asset account on line 1 (as a negative amount) and an in-kind revenue item mapped to a revenue account on line 2 (as a positive amount), both at the estimated FMV at the time the donation was received. The two will offset resulting in a $0 sales receipt. That properly records the estimated FMV of the in-kind donation as an asset on your balance sheet and a corresponding amount as revenue.
After the auction, sell the item on a sales receipt for the auction sale price. When you do that, unless the item sold at the estimated FMV (unlikely), there will be a discrepancy between what the estimated FMV was at the time of the donation at what the actual FMV turned out to be based on the auction sale price so you need to make an adjustment for that. If the item sold for more than the estimated FMV, make a journal entry that debits the in-kind asset account and credits the in-kind revenue account. If the item sold for less than the estimated FMV, make a journal entry that debits the in-kind revenue account and credits the in-kind asset account. Now, you can issue a receipt to the artist for the amount of the FMV based on the actual FMV from the auction and not the estimated FMV at the time of the donation.
