Poly Medica

PolyMedica Corporation (A) Case sight 02-01-2011 PolyMedica Corporation (A) Case Study Problem Statement PolyMedica is under(a) scrutiny by the SEC in regards to capitalization alternatively than expensing of direct response publicize expenditures. conjecture 1 Capitalizing the direct-response advert is the separate way to account for those expenditures. analysis When PolyMedica decided to switch their business warning and change the political economy of their business, it began to capitalize the direct response advertise costs cogitate to the acquisition of new customers rather than expensing them as incurred. To justify this method of explanation PolyMedica reported that their advertising created new customer gross gross revenue from those who responded specifically to the advertisement; they similarly desire these sales generated a probable future benefit. Through the bankers acceptance of the direct-response television advertising campaign sinc e 1996, they have seen an astounding maturation in their sales and customer base. This was especially true with their Medic ar-eligible customers, which grew from 17,000 in 1996 to 545,000 in 2003. Although this was peachy for PolyMedica, these tremendous increases came under scrutiny by investors and then followed by Security and Exchange Commission (SEC) in 2003.

During the questioning by SEC PolyMedica was able to show their accounting data parade was in compliance with the Statement of vista (SOP 93-7) exclusion legal opinion from the American Institute of Certified human beings Accountants (AICPA), whic h required companies to fairly match expens! es with sales generated by individually advertisement. According to this ruling, direct-response advertising may prove to be economically beneficial to companies if the benefits argon measurable and reliable. Additionally they must also show that customers are responding to shown advertisement, which can be linked specifically to the advertisement of a sale. For this PolyMedica had a very sophisticated...If you want to flap a ample essay, order it on our website: OrderCustomPaper.com

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