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Hello sir
I have a doubt regarding advertising expenses.
In most audit risk answers I see that this should be expensed and not capitalize as part of intangible assets.I was wondering if there is a situation where we capitalize it ??
What if advertisement is for a brand acquired ? Will the treatment have an impact
The costs of advertising and promotional activities must be expensed as incurred (IAS 38) – the main justification for this is that the future benefit is inseparable from the creation of goodwill which, because it is internally generated, can never be capitalised.
Of course – the PREPAYMENT of such expenses would be recognised. For example, making a TV advert might cost $100,000 (say) – this would be a prepayment until it is aired (when it would be expensed). The costs of airing would be expensed as incurred.A brand acquired becomes an own brand – so no difference – future advertising etc is part of maintaining the brand.
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