Prepare a report explaining the marketing expenses

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Reference no: EM133185120

Question:

Refer to the article published by News Australia on 26 August 2021, fitted Afterpay and Zip both report losses in 2021 financial results'.

You are a junior accountant at Afterpay and the chief executive tells you that `Afterpay reported a $156.3 million loss for the last financial year, which was up by almost 700 per cent compared to the last year' because its 'marketing expenses more than doubled in the past year with $168.8m spent on promotion compared with $70.5m a year earlier'. The chief executive tells you that these marketing expenses reflect 'increased investment in driving brand awareness' and therefore should be classified as an investment in the balance sheet rather an expenditure in the statement of financial performance. He further adds that this reclassification will take care of the net loss figure and the financial statements will be more reflective of financial position of Afterpay.

For the upcoming board meeting, the chief executive has asked you to prepare a report explaining whether or not the 'marketing expenses' can be treated as 'investment'. Provide justifications for your answer.

To support your arguments, you have to use:
• Authoritative, relevant references,
• Relevant accounting standards, and
• The AASB Framework.

You must refer to relevant paragraphs of the Accounting standards, AASB Framework and other sources of material to help support your argument. When referencing both the Accounting Standards and the AASB Framework, include the relevant paragraph number (eg. AASB 101, pan 137(a) of AASB Framework, para 3).

Reference no: EM133185120

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