IASB April 2007

IAS 38 Intangible Assets—Advertising and promotional activities

The Board discussed a proposed amendment to IAS 38 on the treatment of costs of advertising and promotional or training activities. The proposal from the IFRIC would amend paragraphs 68–70 of IAS 38 to state that a prepayment may be recognised by an entity only until that entity receives the related goods or services however, for expenditure on advertising and promotional or training activities, an asset may be recognised until such time as the activities first take place.

The Board concluded that the proposal addressed two related questions. The first was, at what point should an entity recognise an expense in relation to the delivery of advertising and promotional or training materials to its intended audience. For example, when should an entity recognise the cost of television airtime as an expense? The second was, at what point should an entity recognise an expense in relation to costs incurred in the development of advertising and promotional or training materials. For example, when should an entity recognise the cost of hiring actors for an advertisement to be aired on TV?

The Board asked the staff to develop a further paper for a future meeting.