On 20 December 20X2 your client paid £10,000 for an advertising campaign. The advertisements will be heard on local radio stations between 1 January and 31 January 20X3. Your client believes that as a result sales will increase by 60 per cent in 20X3 (over 20X2 levels) and by 40 per cent in 20X4 (over 20X2 levels). There will be no further benefits.
Required
Write a memorandum to your client explaining your views on how this item should be treated in the financial statements for the three years, 20X2 to 20X4. Your answer should include explicit reference to at least three relevant traditional accounting conventions, and to the requirements of two classes of user of published financial statements.