Accounting And Action Business Insight In the past, the costs of media advertising for burgers, bleaches, athletic shoes,
and such products were sometimes recorded as assets and expensed in subsequent periods as sales took place. The reasoning behind this treatment was that long ad campaigns provided benefits over multiple accounting periods. Today,
this treatment is no longer allowed. Instead, advertising costs must be expensed when the advertising takes place. The issue is important because the outlays for advertising can be substantial. Recent big spenders: Coca Cola spent $2 billion; PepsiCo, Inc., $1.7 billion; Campbell Soup Company, $1.7 billion: and JC Penney Company, $947 million.
Why do you think current accounting rules require that the cost of long ad campaigns be expensed rather than recorded as an asset?