2. Your company paid $2,000,000 for a 30-second commercial to be aired during the SuperBowl 5 months from today. The ad has already been produced at a cost of $1,000,000. You capitalized the $2,000,000 cost of showing the ad on television rather than expensing it. FASB ASC CITATION: Communicating Advertising 720-35-25-5 Costs of communicating advertising are not incurred until the item or service has been received and shall not be reported as expenses before the item or service has been received, except as discussed in paragraph 340-20-25-2. For example: * a. The costs of television airtime shall not be reported as advertising expense before the airtime is used. Once it is used, the costs shall be expensed, unless the airtime was used for direct-response advertising activities that meet the criteria for capitalization under paragraph 340-20-25-4. Answer 2: The FASB Interpretation states that the costs of showing the ad on television should expensed, rather than capitalized unless it is
2. Your company paid $2,000,000 for a 30-second commercial to be aired during the SuperBowl 5 months from today. The ad has already been produced at a cost of $1,000,000. You capitalized the $2,000,000 cost of showing the ad on television rather than expensing it. FASB ASC CITATION: Communicating Advertising 720-35-25-5 Costs of communicating advertising are not incurred until the item or service has been received and shall not be reported as expenses before the item or service has been received, except as discussed in paragraph 340-20-25-2. For example: * a. The costs of television airtime shall not be reported as advertising expense before the airtime is used. Once it is used, the costs shall be expensed, unless the airtime was used for direct-response advertising activities that meet the criteria for capitalization under paragraph 340-20-25-4. Answer 2: The FASB Interpretation states that the costs of showing the ad on television should expensed, rather than capitalized unless it is