Wiley GAAP 2008

Other Costs and Expenses

The integral view is more clearly evident in how current US GAAP treats costs incurred in interim periods. Most other costs and expenses are recognized in interim periods as incurred. However, a cost that clearly benefits more than one interim period (e.g., annual repairs or property taxes) is allocated among the periods benefited. The allocation is based on estimates of time expired, benefit received, or activity related to the specific periods. Allocation procedures are to be consistent with those used at year‐end reporting dates. However, if a cost incurred during an interim period cannot be readily associated with other interim periods, it is not arbitrarily assigned to those periods. The following parameters are used to account for certain types of interim expenses:

1. Costs expensed at year‐end dates that benefit two or more interim periods (e.g., annual major repairs) are assigned to interim periods through the use of deferrals or accruals.

2. Quantity discounts given customers based on annual sales volume are allocated to interim periods on the basis of sales to customers during the interim period relative to estimated annual sales.

3. Property taxes (and like costs) are deferred or accrued at a year‐end date to reflect a full year's charge to operations. Charges to interim periods follow similar procedures.

4. Advertising costs are permitted to be deferred to subsequent interim periods within the same fiscal year if the costs clearly benefit the later interim ...