As above, my client has access to a technology fund with BT to be used against their BT phone costs. So up until the point the fund is used up, my client is receiving nil value invoices from BT. I am thinking that this is referred to as a restricted fund?? and I should create a fund account in the Balance sheet although no monies transfer hands so if the full fund was not used up before the contract end, BT would put it back into their charities pot. However, this wont happen since the contract is for 29 months and at the 6 month mark they anticipate the fund will have been used up and so my client will start being invoiced by BT. I also believe I should be recording some phone costs in the P&L with the other side being to erode this fund in the balance sheet.
My question therefore, I am correct with my thinking and also what is the other side of the double entry to create the fund account in the balance sheet since no cash is changing hands?
Thankyou for any help