Advertising Costs


DEFINITION of 'Advertising Costs '

A category included in financial accounting to represent expenses associated with promoting an industry, entity, brand, product name, or specific products or services in order to stimulate a desire to buy the entity's products or services. Advertising costs include space in print and online venues, broadcast time, radio time and direct mail advertising. Advertisng costs will in most cases fall under SG&A expenses on a company's income statement.

BREAKING DOWN 'Advertising Costs '

The American Institute of Certified Public Accountants' (AICPA) Accounting Standards Executive Committee (AcSEC) released a Statement of Position (SOP 93-7) in 1993 establishing standards for companies that incur advertising costs. SOP 93-7 concluded that advertising costs should be recorded as expenses rather than assets: "Reporting the costs of all advertising as expenses in the periods in which those costs are incurred, or the first time the advertising takes place."

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