ASC

ASC 340-20

Capitalized Advertising Costs

340 Other Assets and Deferred Costs

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In brief

IntermediateTransition and effective datesRecognitionSubsequent measurement

ASC 340-20 formerly governed capitalized advertising costs (including direct-response advertising) — when such costs could be recorded as assets, how they were measured, amortized, tested for realizability, presented, and disclosed. Every paragraph in the subtopic (Sections 05, 15, 25, 30, 35, 45, 50, 55, and 60) has been superseded by Accounting Standards Update No. 2014-09 (Revenue from Contracts with Customers). The subtopic therefore contains no operative guidance; advertising costs are now expensed as incurred (or the first time the advertising takes place) under ASC 720-35, and contract-related costs are addressed by ASC 340-40.

Key points (6)
  • All content of ASC 340-20 was superseded by ASU 2014-09; paragraphs 340-20-05-1 through 340-20-60-1 are marked 'superseded,' and 340-20-05-3 and 05-4 are '[Not used].'
  • Because no recognition (Section 25), measurement (Sections 30 and 35), presentation (Section 45), or disclosure (Section 50) guidance remains, an entity cannot look to 340-20 for authoritative support for capitalizing advertising costs.
  • The former exception permitting capitalization of direct-response advertising costs no longer exists in GAAP after adoption of ASU 2014-09.
  • Advertising costs are now accounted for under ASC 720-35, which requires expensing either as incurred or the first time the advertising takes place.
  • Incremental costs of obtaining a contract and costs to fulfill a contract that were once analogized to advertising capitalization are now evaluated under ASC 340-40.
  • Entities that had not yet adopted ASU 2014-09 applied the pre-amendment 340-20 guidance; transition is governed by ASC 606-10-65-1.

For students. The whole subtopic is a shell — its only exam value is knowing that direct-response advertising capitalization was eliminated by ASU 2014-09. The common mistake is citing 340-20 as live authority for capitalizing advertising; go to ASC 720-35 (expense) or ASC 340-40 (contract costs) instead.

capitalized advertising costsdirect-response advertisingsuperseded guidanceexpense as incurredcosts to obtain a contracttransition to asc 606

Machine-generated study aid for ASC 340-20. Check the source paragraphs below.

340-20-00Status

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340-20-05Overview and Background

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340-20-05-3
[Not used]
340-20-05-4
[Not used]

340-20-15Scope and Scope Exceptions

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340-20-25Recognition

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340-20-30Initial Measurement

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340-20-35Subsequent Measurement

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340-20-45Other Presentation Matters

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340-20-50Disclosure

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340-20-55Implementation Guidance and Illustrations

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340-20-60Relationships

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