U.S. GAAP Codification of Accounting Standards

U.S. GAAP Codification   Accounting Standards, ASC

U.S. GAAP Codification of Accounting Standards
Codification Topic 3
40-20: Capitalized Advertising Costs


U.S. GAAP Codification Updates
Principles of Accounting Intermediate Accounting Advanced Accounting
Accounting Terms


Codification Topic 340-20
Capitalized Advertising Costs



Advertising Costs

AICPA Statement of Position (SOP) 93-7
"Reporting on Advertising Costs"

General Principle
Advertising costs are expensed 
--> except for (A)
(A) Direct-response advertising

When are advertising costs expensed?
Entities have a choice of (1) and (2)
(1) Expensed when incurred
(2) Expensed when the advertising takes place first time

Advertising expenditures after revenue recognition
--> When the entity reimburses the costs of "cooperative advertising" after advertising takes place
--> Advertising costs are expensed when related revenue is recognized

Direct-response advertising costs are capitalized if both conditions are met
1. Primary purpose of advertising is
--> to promote sales to certain customers
--> whose responses to the advertising can be documented
2. Probable future benefits from direct-response advertising

Capitalized advertising costs are amortized
--> on a "cost-pool-by-cost-pool" basis
--> over the period of future benefits

Realizability test for subsequent measurement
If future benefit is less than carrying amount
--> expense the excess as advertising costs during the period







   Codification Topic 340
   Other Assets and Deferred Costs
 
Subtopics of Codification Topic 340
 
   340-10 Overall
   340-20 Capitalized advertizing costs
   340-30 Insurance contracts that do not transfer insurance risk   
 
Accounting Terms of Codification Topic 340-10
 
 
Accounting Terms of Codification Topic 340-20
 
 
Accounting Terms of Codification Topic 340-30
 
   Assuming entity
   Ceding entity
   Experience adjustment
   Insurance risk
   Timing risk
   Underwriting risk



   Other Topics at the Codification 300 
Accounting Standards Codification, ASC, Overview
 
ASC Codification Topic 305: Cash and Cash Equivalents
 
ASC Codification Topic 310: Receivables
 
ASC Codification Topic 320: Investments-Debt and Equity Securities
ASC Codification Topic 323: Investments-Equity Method and Joint Ventures
ASC Codification Topic 325: Investments-Other
 
ASC Codification Topic 330: Inventory
 
ASC Codification Topic 340: Other Assets and Deferred Costs
 
ASC Codification Topic 350: Intangibles-Goodwill and Other
 
ASC Codification Topic 360: Property, Plant, and Equipment


   U.S. GAAP Codification of Accounting Standards
Accounting Standards Codification, ASC, Overview
ASC Codification 200: Presentation
ASC Codification 300: Assets
ASC Codification 400: Liabilities
ASC Codification 500: Equity
ASC Codification 600: Revenue
ASC Codification 700: Expenses
ASC Codification 800: Broad Transactions
ASC Codification 900: Industry

U.S. GAAP by Topic
Accounting Topics








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