I'm Brain Dead info on Infomercial

[NECPA in NEBRASKA]

Clients paid $75,000 in 2008 for an Infomercial that won't air until May, 2009. On an accrual basis payer, I'd charge it to prepaid advertising. They are cash basis. Should I be researching anything else to capitalize it? I can't imagine that the business will survive the next two years, but there could be a miracle. I am just too tired and crabby to think properly.

Thanks!

[Kea]

Off the top of my head, I would say to use it in 2009 since that is the 1st date of service. Kinda like insurance - you count it where it is used even if you are cash basis.

Maybe?

[Janitor Bob]

Clients paid $75,000 in 2008 for an Infomercial that won't air until May, 2009. On an accrual basis payer, I'd charge it to prepaid advertising. They are cash basis. Should I be researching anything else to capitalize it? I can't imagine that the business will survive the next two years, but there could be a miracle. I am just too tired and crabby to think properly.

Thanks!

If cash basis, the expense is recognized when paid...so it would be a 2008 advertising expense

[NECPA in NEBRASKA]

Thanks! That's pretty much what I'm thinking, even though it is going to make their return look even more riduculous than it already looks. Good thing they don't ask my advice. I'm just telling them not to be surprised if they get audited. I wish it was an asset, but it does have a short life.

Bonnie