Seattle FilmWorks capitalizes the costs of its direct mailings to prospective customers, expensing them over three years rather than in the year they’re incurred. There’s nothing wrong with this practice per se. If the customers netted by mailing come back with repeat business year after year, you really have booked an asset. But there is no guarantee that the first-time customer will become a regular. Consequently, large dollar amounts of marketing costs sit on the company’s balance sheet as an asset.
This situation was familiar to America Online shareholders. By spreading its marketing expenses over several years, AOL was able to create artificially high earnings. The company finally changed its accounting policy. Result: A $385 million write-off.
Discuss the trade-offs involved with capitalizing marketing costs from a matching standpoint and from the perspectives of management, the shareholders, and the auditors.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more