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To: Windseye who wrote (1860)	10/4/2002 2:51:25 PM
From: Oeconomicus	Read Replies (1) \| Respond to of 4345

(advertising expense that may benefit future quarters can be capitalized.) "May benefit" is not a threshold that will pass muster with a half-way decent auditor or the SEC. Like I said before, circumstances where one could clearly tie current advertising spending to future period revenues would be highly unusual. Perhaps a real-world example will help: AOL tried, a few years ago, to capitalize certain "customer acquisition costs" to be amortized over the typical life of a customer. The idea was that the advertising, CD distribution, sign-up incentives or whatever they were spending money on at the time to get a new subscriber was the cost of acquiring a long-term revenue stream and should be expensed over that same long term. Matching of revenues and associated expenses, right? Wrong, at least according to the SEC. AOL was forced to restate earnings to the tune of a few hundred million dollars, taking a charge to write off these improperly capitalized expenses. If it doesn't pass muster where AOL could clearly show a long-term revenue stream associated with those expenses, why would anyone here think that a (primarily) product company like Dell would even try it, much less expect to get away with it. I don't think Dell management is stupid, so I don't believe they are doing it. BTW, I still haven't heard URL come up with even a hypothetical set of circumstances where Dell could justify doing what he suggested they are already doing. Two sentence summaries of accounting rules that say "the general rule is X, but there may be exceptions allowing you to do Y" should not be taken to mean "sure, you can do Y." A better interpretation would be "if you think you qualify for an exception allowing Y, run it by your auditor or the SEC so they can tell you to use X." In other words, DON'T CAP AD COSTS.

To: Windseye who wrote (1860)	10/4/2002 4:47:31 PM
From: MeDroogies	Respond to of 4345

Windseye...the key word there is MAY. I agree with URL's points...but MAY is a tough word. I sell media. I can tell you, 90% of what I see being put on is useless. 50% is spent based on ego (agency buyer ego, "hey, I got Seinfeld for a song!", CEO ego "Hey, I HAVE to be in the Super Bowl [the worst place for advertising, btw, in terms of cost/reach], and sales ego "You won't get a better placement than this, but you have to buy now") Seriously, advertising WORKS, but you have to really ride it with tight reins.