and why, thanks.
According to GAAP regulation, advertisement cost are usually expensed as incurred. TH exception to this rule is the costs of direct-response advertising with probable future benefits, which can be capitalized and amortized over the estimated life of the future benefits.
Like those adds that you see running on TV: “call now and you will receive…”. The cost of running that advertise is capitalized.
I see, thanks, I didn’t understand what a direct-response advertising is
rule of thumb from my accounting classes Capitalize and depreciate an asset if : asset is used in trade or business, or held for the production of income + has a useful life of more than one year or operating cycle whichever longer + will wear out over time + is fully installed and ready for use Capitalize, but do not depreciate, if The asset will neither wear out nor lose value over time, or OR The asset is neither fully installed nor ready expense anything else as usual u get exeptions like the one strangedays described; but then those costs become invest in immaterial asset and will get depreciated. an interesting point would be if u keep investing in advertisment (just as Cartier, Chanel and all the already famous brands that invest millions in advertising) u r creating goodwill.