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Hello KIM hope u are well.
An advertising campaign has been launched, to promote the company brand generally, and to make customers aware of the investments in the facilities which have been made. As part of this campaign, the company paid $1 million to a famous athlete to endorse the company for a period of two years.
what is the accounting treatment of the above. should we treat as intangible asset ?
Short answer – no – IAS 38 prohibits.
But that does not preclude normal “accrual accounting” – so if the $1m was paid all in advance and the athlete is contractual bound for 2 years – if 9 months had elapsed (say) at the reporting date, 1 year 3 months could be recognised as a prepayment.
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