Accounting for Advertising Expense.

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Example. A company has an ongoing TV ad campaign. All production costs have already been expensed. The company pays $3 million dollars in April for 3 months of air time which starts in May. The $3 million is strictly for media buy and the cost of delivering the campaign to the consumer and the air time is equal for all 3 months. What is the appropriate accounting treatment under GAAP?
 
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This looks like a simple accrual entry.

You would book this in April:

Dr. Prepaid expenses 3M
Cr. Cash 3M​

You would book this in May, June, and July:

Dr. Advertising expense 1M
Cr. Prepaid expenses 1M​
 
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bklynboy

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ColinCPA has it right. GAAP guidance is specific on this and requires R&D expensed upfront with costs of media and sponsorships over period benefited.
 

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