The following table identifies the changes made to this Subtopic.
The guidance in this Subtopic applies to all entities, including not-for-profit entities (NFPs).
The guidance in this Subtopic applies to all advertising transactions and activities, with specific exceptions noted below.
The guidance in this Subtopic does not apply to the following transactions and activities:
- a
Direct-response advertising costs of an insurance entity (for guidance, see Subtopic
944-30 on insurance).
- b
Advertising costs in interim periods (for guidance, see paragraph 270-10-45-7). - c
Costs of advertising conducted for others under contractual arrangements.
- d
Indirect costs that are specifically reimbursable under the terms of a contract.
- e
Fundraising by NFPs (however, this Subtopic does apply to advertising activities of NFPs).
- f
Customer acquisition activities, other than advertising.
- g
The costs of premiums, contest prizes, gifts, and similar promotions, as well as discounts or rebates, including those resulting from the redemption of coupons. (Other costs of coupons and similar items, such as costs of newspaper advertising space, are considered advertising costs.)
The guidance in this Subtopic may or may not apply to the following transactions and activities:
- a
Some activities, such as product endorsements and sponsorships of events, which may be performed pursuant to executory contracts. Costs incurred under executory contracts generally are recognized as performance under the contract is received. Executory contracts should be evaluated to determine whether the costs recognized under such contracts are advertising costs. To the extent that those costs are advertising costs, such costs should be accounted for in conformity with the guidance in this Subtopic.
Expenditures for some advertising costs are made after recognizing revenues related to those costs. For example, some entities assume an obligation to reimburse their customers for some or all of the customers' advertising costs (cooperative advertising). When revenues related to the transactions creating those obligations are recognized before the expenditures are made, those obligations shall be accrued and the advertising costs expensed when the related revenues are recognized.
For purposes of applying this Subtopic, costs incurred to produce film or audio and video tape to be used to communicate advertising do not create tangible assets.
Sales materials, such as brochures and catalogues, may be accounted for as prepaid supplies until they no longer are owned or expected to be used, in which case their cost would be a cost of advertising and shall be accounted for in conformity with the guidance in this Subtopic.
Costs of producing advertising are incurred during production rather than when the advertising takes place.
Depreciation or amortization of a tangible asset may be a cost of advertising if the tangible asset is used for advertising.