A new business paid 128,000 (5% of its first years turnover) to an agent on an advertising
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A new business paid £128,000 (5% of its first year’s turnover) to an agent on an advertising contract in the hope that it will generate sales over the next few years. Identify one of the following reasons as the most pertinent one for not reporting the whole amount as an asset at the end of the first year:
(a) It is not the common practice in business of this nature
(b) Advertising is not an asset because it does not have physical substance (it is intangible)
(c) The payment does not give the business control over its customers’ behaviour
(d) There is no reasonable assurance that economic benefit in the form of sales will flow from it
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Related Book For
Financial Accounting An Introduction
ISBN: 9780273737650
2nd Edition
Authors: Mr Barry Elliott, Mr Augustine Benedict
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