Use the Information Below to Answer the Following Questions

question 9

Multiple Choice

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?

• A) There would be a $75 000 reduction.
• B) There would be a $45 000 reduction.
• C) There would be a $30 000 reduction.
• D) There would be no effect.

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Definitions:

Emerging Adult

A phase of life between adolescence and full-fledged adulthood, typically ranging from ages 18 to 25, characterized by exploration and gradual assuming of adult roles.

High School

An educational institution for teenagers that follows primary education and prepares them for higher education or employment.

College

An institution of higher learning that offers undergraduate programs, typically leading to a bachelor's degree.

Parental Behavior

Parental behavior involves the actions and strategies used by parents in raising their children, which can affect the child's psychological and emotional development.