Elcox Inc. spent $2.3 million on a new advertising campaign this year. Which of the following statements is true?

Question

Quizplus · Accepted Answer

According to the tax law, advertising costs are considered ordinary and necessary business expenses and are fully deductible in the year they are incurred. Elcox can deduct the $2.3 million cost on this year's tax return. Option A is incorrect because Elcox does not need to expense the advertising costs for financial statement purposes. Option B is incorrect because Elcox does not need to capitalize the costs. Option D is incorrect because there is no book/tax difference created by this expense.

Elcox Inc Spent $2