# ASC 720-35-05: Other Expenses — Advertising Costs — 05 Overview and Background

Source: FASB Accounting Standards Codification, Basic View

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## ASC 720-35-05: 05 Overview and Background

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##### [720-35-05-1](https://asc.understandingaccounting.org/asc/720/35/#720-35-05-1)

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This Subtopic provides guidance for annual financial statements on the following:

1.  a
    
    Reporting the costs of advertising
    
2.  b
    
    The financial statement disclosures that shall be made about advertising.

##### [720-35-05-2](https://asc.understandingaccounting.org/asc/720/35/#720-35-05-2)

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[Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/).

##### [720-35-05-3](https://asc.understandingaccounting.org/asc/720/35/#720-35-05-3)

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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:

1.  a
    
    Financial statement preparers generally presumed that the benefit period is short.
    
2.  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.
    
3.  c
    
    The advertising costs for some entities were not material.
    
4.  d
    
    Advertising is undertaken to provide or increase future economic benefits.

#### Description of Advertising

##### [720-35-05-4](https://asc.understandingaccounting.org/asc/720/35/#720-35-05-4)

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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:

1.  a
    
    Directory and buyer's guide advertising
    
2.  b
    
    Business and industrial publications
    
3.  c
    
    Reprints of advertisements
    
4.  d
    
    Television advertising
    
5.  e
    
    Direct-mail advertising
    
6.  f
    
    Consumer publications
    
7.  g
    
    Radio advertisements
    
8.  h
    
    Billboard advertisements
    
9.  i
    
    Entity and product catalogues
    
10.  j
     
     Cooperative advertising
     
11.  k
     
     Booklets for sales promotion
     
12.  l
     
     Newspaper advertising
     
13.  m
     
     Point-of-sale material
     
14.  n
     
     Sponsorship of public events.

#### Components of Advertising Activities

##### [720-35-05-5](https://asc.understandingaccounting.org/asc/720/35/#720-35-05-5)

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Advertising activities may have several component costs. Two primary components are the following:

1.  a
    
    The costs of producing advertisements, such as for idea development, writing advertising copy, artwork, printing, audio and video crews, actors, and other costs
    
2.  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).