Final answer:
The issue is a barter exchange of services for rental use. Such transactions are recorded at the fair value of the services exchanged and recognized as revenue for the magazine and expense for the rental use.
Step-by-step explanation:
The issue presented in the scenario is an exchange of services where your friend advertises in the local magazine in exchange for the use of a rental. This transaction is a barter transaction and must be recorded on the financial statements at the fair value of the services received or provided, whichever is more clearly determinable. The fair value is then recognized as revenue for the magazine and as an expense for the rental use. It is important to ensure the transaction is recorded with sufficient documentation to verify the fair value of the exchanged services.