Treatment of Marketing Cost
This query is : Resolved
03 October 2008
Hello friends.
I want to know about the accounting treatment of Marketing & Branding expenses incurred prior to the commencement of the operation of an new assets.
For example whether we should capitalize or expanse off the marketing expense incurred prior to the commencement of the commercial operation of an Hotel or let say before the launch of an product?
I have two different opinion on that first being that as we can not strictly identify the marketing & branding cost with any particular assets, such as building, land & hence it should be expense off rather than distributed over other assets. Second marketing & branding expenses are necessary to create demand or visibility for the company or the product, hence it should be capitalize over other assets.
Please suggest what is the correct accounting treatment for the same in view of AS-26, AS-10 & Any judgment by courts.
I want to know about the accounting treatment of Marketing & Branding expenses incurred prior to the commencement of the operation of an new assets.
For example whether we should capitalize or expanse off the marketing expense incurred prior to the commencement of the commercial operation of an Hotel or let say before the launch of an product?
I have two different opinion on that first being that as we can not strictly identify the marketing & branding cost with any particular assets, such as building, land & hence it should be expense off rather than distributed over other assets. Second marketing & branding expenses are necessary to create demand or visibility for the company or the product, hence it should be capitalize over other assets.
Please suggest what is the correct accounting treatment for the same in view of AS-26, AS-10 & Any judgment by courts.
03 October 2008
the same needs to be treated as pre-operative expenses and amortised as deferred expenditure rather than capitalise the same
03 October 2008
The view of Mr. Mohanakrishnan is correct.
03 October 2008
Thanks a lot Sir
But the problem is that As per AS-26, now we can not deferred the expense such as marketing & branding as they do not meet the criteria set for deferring the expense in AS-26. Hence you can defer the expense upto FY 2010 after which AS-26 is mandatory.
But the problem is that As per AS-26, now we can not deferred the expense such as marketing & branding as they do not meet the criteria set for deferring the expense in AS-26. Hence you can defer the expense upto FY 2010 after which AS-26 is mandatory.
03 October 2008
Thnks
04 October 2008
That is true.
06 October 2008
Please suggest any other option on treatment of same
06 October 2009
Hello, is this an old query still pending? You can send me a Pm if yes....I m trying to take all old pending queries in Accounting Forum......Thanx.
06 October 2009
Hello, is this an old query still pending? You can send me a Pm if yes....I m trying to take all old pending queries in Accounting Forum......Thanx.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Reopen of assessment proceeding
- Is any professional CA is here please reply
- EPF FULL & FINAL RULES IN 2026
- EXPORT BILL UNDER LUT FREIGHT CHARGE INCLUED IN INVOICE IT LIABLE TO TAX
- Reprocessing of rectification order AY 2025-26
- FTS Taxable under 115A
- Rental income gst and it purpose
- Foreign lottery ticket bought online from India: legality, tax and consequences
- Putting a heading on received mail
- COMMERCIAL INVOICE FOR MATERIAL AND FREIGHT
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- STATUTORY AUDIT OF A SMALL PRIVATE COMPANY INCORPORATED ON 28.03.2025
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
- CALCULATION OF DEFFERED TAX - OP BL IS DTL & CURRET IT DTA
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
