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This Subtopic provides guidance for annual financial statements on the following:
a
Reporting the costs of advertising
b
The financial statement disclosures that shall be made about advertising.
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The following are some of the reasons that costs incurred in anticipation of the probable future economic benefits of advertising generally are expensed:
a
Financial statement preparers generally presumed that the benefit period is short.
b
The periods during which the future economic benefits probably would be received and the amounts of such benefits could not be measured and determined easily and objectively.
c
The advertising costs for some entities were not material.
d
Advertising is undertaken to provide or increase future economic benefits.
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Advertising is the promotion of an industry, an entity, a brand, a product name, or specific products or services so as to create or stimulate a positive entity image or to create or stimulate a desire to buy the entity's products or services. Advertising generally uses a form of media—such as mail, television, radio, telephone, facsimile machine, newspaper, magazine, coupon, or billboard—to communicate with potential customers. Examples of advertising include the following:
a
Directory and buyer's guide advertising
b
Business and industrial publications
c
Reprints of advertisements
d
Television advertising
e
Direct-mail advertising
f
Consumer publications
g
Radio advertisements
h
Billboard advertisements
i
Entity and product catalogues
j
Cooperative advertising
k
Booklets for sales promotion
l
Newspaper advertising
m
Point-of-sale material
n
Sponsorship of public events.
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Advertising activities may have several component costs. Two primary components are the following:
a
The costs of producing advertisements, such as for idea development, writing advertising copy, artwork, printing, audio and video crews, actors, and other costs
b
The costs of communicating advertisements that have been produced, such as for magazine space, television airtime, billboard space, and distribution (for example, postage stamps).
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