marketing costs

marketing costs on the balance sheet

Didn't find your answer?

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 

Replies (8)

Please login or register to join the discussion.

avatar
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.

Thanks (0)
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%?

Thanks (0)
avatar
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.

Thanks (0)
avatar
By uksmen2
09th Dec 2020 19:38

Hello, does anyone have any experience for the treatment of marketing costs on the side of vehicles (eg buses) for logo's and web address details etc where the vehicle is leased not purchased & capitalised.

I would usualy treat this as marketing expense when incurred rather than (for example) a prepayment over the same period as the lease.
Any idea what taxi drivers do when they lease a vehicle but have to pay for the logos etc ?
Thanks !

Thanks (0)
Routemaster image
By tom123
10th Dec 2020 08:50

Well,
I defer trade show costs until the show takes place - some big ones in 2019 have been cancelled as you can imagine.

Costs of vehicle livery are treated as part of the base cost of the vehicle.

Paying for a marketing campaign that had not started - yes I would defer that until launch.

What I would not do is further space the cost out over a period of perceived benefit.

Thanks (0)
avatar
By Mr_awol
10th Dec 2020 09:31

Like others i'll carry forward trade show and exhibition expenditure until the event takes place.

Other than that, I don't think I have prepaid marketing since they stopped doing the Yellow Pages (for those not old enough to remember, this was an annual subscription and you paid a separate sub for each geographical area).

As for the signwriting issue (especially taxi and one man band related) it's normally only a couple of hundred quid so i am generally happy to leave it in MRE - or advertising - or pretty much wherever the client has put it because it really isn't worth moving it.

Thanks (0)
Replying to Mr_awol:
Routemaster image
By tom123
10th Dec 2020 10:29

You got me - "MRE"??

Thanks (0)
avatar
By WhichTyler
30th May 2022 07:59

I would defer recognition until the marketing activity actually happens (eg th trade fair as discussed below, or when the pre-paid advertising appears), as that is when the company has the benefit of the expenditure.

Deferring until revenue arrives is a fool's errand for obvious reasons (not all marketing covers its direct costs...)

Thanks (0)