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marketing costs

marketing costs on the balance sheet

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Treatment query: marketing costs (for past services rendered) deferred to balance sheet under FRS 102 and matched to the P&L when the relating revenue hits. Has anyone heard of this trratment previously and does it presents a GAAP difference between FRS102 and IFRS. Thanks 

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By paul.benny
22nd Oct 2019 11:57

I'm uncomfortable with deferring any revenue expenditure without very strong justification.

Prepaying costs until an event such as a trade show is one thing. But in general parking marketing cost on the balance sheet is a no-no under any accounting standards.

More information about the nature of the cost and the rationale for deferral would help give a more definitive answer.

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By johngroganjga
22nd Oct 2019 13:07

I agree with Paul. Where the logic of the approach you describe fails is that there may well never be any new sales that result from the deferred marketing spend. Who said that 90% of all advertising spend is wasted, but no-one knows which 90%?

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By Mike Bath
22nd Oct 2019 15:50

Agree with both John & Paul that capitalising marketing costs is suspect unless you can very clearly identify the revenue generated or service delivered. Prepaying exhibition costs & releasing at the date of the exhibition is ok; prepaying the costs of an advertising campaign where you know that your adverts will run over several months (and releasing the costs of the campaign over those months) is ok. Deferring the costs of marketing research or similar that's already been done/delivered is going to be tough to justify unless you can prove a direct link between the work done & any additional revenue generated.

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