A small grocery mart is going to be donating some food items for a Christmas food drive in December.
If the business is donating these items directly from the stores inventory how would this be accounted for or do you advise the donation be done in another manner?
They are already accounted for in the reduction of inventory which results in the costs being recognized in Cost of Sales. For financial statement presentation, particularly if the cost is significant they could transfer that cost out of Cost of Sales and charge it to Donations.
Note that, the grocery store will only get to claim the cost in one way or another.
They will not be permitted to claim it at retail value.
Unless you get an official receipt from the Food Bank, it should NOT be listed as a donation as CRA has the right to request a copy of the receipt (which would not exist).
Either reduce the cost of goods to public relations/advertising or simply as part of the year-end inventory adjustment assuming the amount is immaterial.