If a Company That Normally Expenses Advertising Costs Was to Capitalize

question 11

Multiple Choice

If a company that normally expenses advertising costs was to capitalize and amortize these costs over 3 years instead:

• A) after the third year net income would always be higher if it is capitalized.
• B) after the third year net income would always be lower if it is capitalized.
• C) after the third year net income would be higher (if it is capitalized) only if advertising costs were increasing.
• D) after the third year net income would be lower (if it is capitalized) only if advertising costs were increasing.

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Definitions:

Federal Government

A system of government where power is divided between a national (federal) government and various regional governments.

Astroturf Lobbying

A political strategy that simulates grassroots support for an issue, often sponsored by corporations or interest groups to create the appearance of widespread public backing.

Grassroots Organizations

Organizations that use collective action from the local level to effect change at the local, regional, national, or international level, often through community involvement.

Insider Strategy

A method or approach used by individuals within an organization or group to influence decisions or policies from the inside.