ACCOUNTING FOR ADVERTISING COSTS -DIFFERENCES AND SIMILARITIES BETWEEN THE US GAAP, IAS / IFRS AND THE GERMAN COMMERCIAL CODE
Keywords:
advertising costs, agency theory, financial reporting, German Commercial Code, International Accounting Standards (IAS) / International Financial Reporting Standards (IFRS), US GAAP.Abstract
Advertising costs take on increasing importance. Nevertheless, accounting for these costs still involves many problems. Especially, one of the main problems is whether these costs should be treated as assets placed on the balance sheet, or as expenses appearing on the income statement. This paper reveals that in comparison with IAS/IFRS and German Commercial Code, US standards on accounting for advertising costs implicitly offer more alternative accounting treatments. Regardless of the different goals of US GAAP and IAS/IFRS, on the one hand, and German financial reporting, on the other, this paper sets forth that accounting for advertising costs is always dominated by the principles of conservatism and objectivity. This result can be explained with the agency theory.
References
Adler / Düring / Schmaltz (1998), Rechnungslegung und Prüfung der Unternehmen, Kommentar zum HGB, AktG, GmbHG, PubIG nach den Vorschriften des Bilanzrichtlinien-Gesetzes, Vol. 6, commentary on paragraph 248 of German Commercial Code, 6th ed., pp. 377-389.
Albrecht, W. Steve / Stice, James D./Stice, Earl K./Skousen, K. Fred/Swain, Monte R. (2002), Accounting: Concepts and Applications, 8th ed.
Alexander, David / Archer, Simon (2004), 2004 Miller International Accounting/ Financial Reporting Standards Guide.
Baetge, Jörg / von Keitz, Isabel (2003), IAS 38: Immaterielle Vermögenswerte (Intangible Assets), commentary on IAS 38, in: Rechnungslegung nach International Accounting Standards (IAS), Kommentar auf der Grundlage des deutschen Bilanzrechts, edited by Jörg Baetge, Dietrich Dörner, Heinz Kleekämper, Peter Wollmert and Hans-Jürgen Kirsch, 2nd ed,
Bazley, John D, / Nikolai, Loren A./Grove, Hugh D, (1995), Financial Accounting: Concepts and Uses, 3rd ed,
Cairns, David (2002), Applying International Accounting Standards, 3rd ed
Carmichael, D, R. / Rosenfield, Paul H., eds. (2003), Accountants’ Handbook, Vol. 1: Financial Accounting and General Topics, 10th ed.
Diamond, Michael A. (1996), Financial Accounting, 4th ed.
Epstein, Barry J. / Mirza, Abbas Ali (2004), Wiley IAS 2004: Interpretation and Application of International Accounting and Financial Reporting Standards.
Epstein, Barry J. / Nach, Ralph/Black, Ervin L. / Delaney, Patrick R. (2005), Wiley GAAP 2005: Interpretation and Application of Generally Accepted Accounting Principles.
Förschle, Gerhart (2003), Commentary on paragraph 248 of German Commercial Code, in: Beck’scher Bilanz-Kommentar, edited by Axel Berger, Helmut Ellrott, Gerhart Förschle and Burkhard Hense, 5th ed., pp. 233-240.
Haller, Axel (1994), Positive Accounting Theory: Die Erforschung der Beweggründe bilanzpolitischen Verhaltens, in: Die Betriebswirtschaft (1994), pp.597-612.
Hartman, Bart Р./Harper, Robert M./Knoblett, James A./Reckers, Phillip M. J. (1995), Intermediate Accounting.
Hax, Herbert (1991), Theorie der Unternehmung - Information, Anreize und Vertragsgestaltung, in: Betriebswirtschaftslehre und Theorie der Verfügungsrechte, edited by Dietrich Budäus, Elmar Gerum and Gebhard Zimmermann, pp. 51-72.
Jeter, Debra C. / Chaney, Paul K. (2004), Advanced Accounting, 2nd ed.
Kieso, Donald E. / Weygandt, Jerry J./Warfield, Terry D. (2004), Intermediate Accounting, 11th ed.
Laux, Helmut (1999), Unternehmensrechnung, Anreiz und Kontrolle: Die Messung, Zurechnung und Steuerung des Erfolgs als Grundprobleme der Betriebswirtschaftslehre, 2nd ed.
Lenk, Margarita Maria (1998), intangible Assets, in: The Blackwell Encyclopedic Dictionary of Accounting, edited by A. Rashad Abdel-Khalik, pp. ISO-184.
Lev, Baruch (2001), Intangibles: Management, Measurement, and Reporting.
lüdenbach, Norbert/Hoff mann, Wolf-Dieter (2003), Haufe IAS-Kornmentar.
Maples, Larry / Earles, Melanie (1999), When Should Advertising Be Capitalized?, in: Journal of Accountancy, Vol. 187 No. 5, pp. 49-54.
Moody, Lailani (2003), Goodwill and Other Intangible Assets, in: Accountants’ Handbook, Vol. 1: Financial Accounting and General Topics, edited by D. R. Carmichael and Paul H. Rosenfield, 10th ed., pp. 20-1-20-31
Moxter, Adolf (1999), Bilanzrechtsprechung, 5th ed.
Moxter, Adolf (2003), Grundsätze ordnungsgemäßer Rechnungslegung.
Niemann, Ursula (1999), Immaterielle Wirtschaftsgüter im Handels- und Steuerrecht: Bilanzierung, Bewertung, Sonderfälle.
Nikolai, Loren A. / Bazley, John D. (2003), Intermediate Accounting, 9th ed.
Pellens, Bernhard (2001), internationale Rechnungslegung, 4th ed.
Pellens, Bernhard / Fülbier, Rolf-Uwe/Gassen, Joachim (2004), Internationale Rechnungslegung, 5th ed.
Revsine, Lawrence / Collins, Daniel W./Johnson, W. Bruce (2005), Financial Reporting and Analysis, 3rd ed.
Schildbach, Thomas (1989), Überlegungen zur Zukunft des Verhältnisses von Handels- und Steuerbilanz, in: Betriebswirtschaftliche Forschung und Praxis (1989), pp. 123-140.
Schildbach, Thomas (2002), US-GAAP: Amerikanische Rechnungslegung und ihre Grundlagen, 2nd ed.
Stice, Earl K. / Stice, James D/Diamond, Michael A. (2003), Financial Accounting: Reporting and Analysis, 6th ed.
Tanenbaum, Joel (1993), Reporting on Advertising Costs, in: Journal of Accountancy, Vol. 175 No. 6, pp. 79-80.
Tanenbaum, Joel / Finger, Andrew D. (1994), Reporting on Advertising Costs, in: The CPA Journal, Vol. 64, pp. 36-40.
von Keitz, Isabel (1997), Immaterielle Güter in der internationalen Rechnungslegung - Grundsätze für den Ansatz von immateriellen Gütern in Deutschland im Vergleich zu den Grundsätzen in den USA und nach IASC.
Weber-Grellet, Heinrich (2004), Commentary on paragraph 5 of German Income Tax Law, in: Einkommensteuergesetz, Kommentar, edited by Ludwig Schmidt, 23th ed., pp. 390-512.
Weiss, Judith/Williams, Jan R. / Carcello, Joseph V. (2005), 2005 Miller GAAP Guide Levels В, C, and D: Restatement and Analysis of Other Current FASB, EITF, and AICPA Pronouncements.
Williams, Jan R. / Carcello, Joseph V. (2005), 2005 Miller GAAP Guide Level A: Restatement and Analysis of Current FASB Standards.
Winnefeld, Robert (2002), Bilanz-Handbuch: Handels- und Steuerbilanz, Rechtsformspezifisches Bilanzrecht, Bilanzielle Sonderfragen, Sonderbilanzen, IAS/ US-GAAP, 3rd ed.
Wolk, Harry I. / Dodd, James L. / Tearney, Michael G. (2004), Accounting Theory: Conceptual Issues in a Political and Economic Environment, 6th ed.
Downloads
Published
How to Cite
Issue
Section
License
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
