So as to legitimize underwriting the immediate reaction promoting costs, the organization should show to the SEC that these expenses fulfill the necessities of being resources. Comprehension of the contrasts amongst resources and costs is vital to this issue. Resources are characterized as assets with financial esteem that are possessed by the organization and are required to yield future monetary advantages. Costs, then again, are characterized as "monetary expenses acquired by the organization to procure income". Organization has been promoting the publicizing costs in light of AICPA's mission statement (SOP) 93-7. This article expresses that if the promoting is of such a nature, to the point that costumers react particularly to the advertisements, then the expenses brought about in such manner can be promoted in light of the fact that these costs help the organization to win in future a likely future financial advantage.
1. Will the SEC require Poly-Medica to change its method of accounting for direct response advertising?
2. If the company restated its financial statements, what would the impact be on the company’s stock price?