Fasb Codification

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1. The inventory at your company consists of computer software that the company has developed and is selling. You capitalized (rather than expensed) the cost of duplicating the software, the instruction manuals, and training material that are sold with the software. 985 Software: 330 Inventory: 25 Recognition 25-1 The costs incurred for duplicating the computer software, documentation, and training materials from the product masters and for physically packaging the product for distribution shall be capitalized as inventory on a unit-specific basis. The cost of duplicating the software, instruction manuals, and training materials that are sold with the software is capitalized and amortized to current and future periods. Any…show more content…
The ad has already been produced at a cost of $1,000,000. You capitalized the $2,000,000 cost of showing the ad on television rather than expensing it. 340 Other Assets and Deferred Costs: 20 Capitalized Advertising Costs: 25 Recognition Criteria to Capitalize Direct-Response Advertising Costs 25-4 The costs of direct-response advertising shall be capitalized if both of the following conditions are met: a. The primary purpose of the advertising is to elicit sales to customers who could be shown to have responded specifically to the advertising. Paragraph 340-20-25-6 discusses the conditions that must exist in order to conclude that the advertising 's purpose is to elicit sales to customers who could be shown to have responded specifically to the advertising. b. The direct-response advertising results in probable future benefits. Paragraph 340-20-25-9 discusses the conditions that must exist in order to conclude that direct-response advertising results in probable future benefits. The cost of the 30-second commercial ($2,000,000) is capitalized (treated as an asset) until the ad airs for the first time and will be amortized over future periods. Advertising costs are expensed when the related revenue is recognized which will be the first appearance of the ad in direct-response advertising. The company 's obligation for advertising expenditures it will make subsequent to recognizing
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