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Use the information below to answer the following questions:
Plant Hire Ltd has been in business for one year. The company makes it a practice to capitalise a portion of its advertising costs as a ‘deferred asset’ and to amortise them at 25% per annum. The accountant has suggested to the general manager that the policy of capitalising advertising should be ended because the economic benefit of the expenditures is not clearly determinable. The amount of advertising capitalised this year was $100 000.
-What effect would such a policy change have on net profit before tax?
Test Markets
Regional markets or demographic groups used for launching new products to evaluate consumer response before a national rollout.
Competitors
Businesses or individuals that compete within the same market for resources and customers.
Information Technology
Includes all of the computing resources that collect, store, and analyze data.
Nonpersonal Source
A communication or marketing message delivered through media or other channels that do not involve personal contact or direct interaction.
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