Business Glossary

costs wherein advertising is expensed as incurred or when the advertising program first takes place. However, the cost of direct response advertising may be deferred if the prime objective of the promotion is to elicit sales to customers who respond specifically to the advertising and for which there is future benefit. The deferred advertising is amortized over the expected benefit period using the revenue method (current year revenue to total revenue). The cost of a billboard should also be deferred and amortized.