Question

In 2012, Ghostbusters Corp. spent $420,000 for "goodwill" visits by sales personnel to key customers. The purpose of these visits was to build a solid, friendly relationships for the future and to gain insight into the problems and needs of the companies served. How should this expenditure be reported

Answer 1

Since the expenditure was incurred to meet the key customers in order to maintain a healthy relatioship with them there by to promote the business for improvement.

Benifit out of the expenditure will definitely seen in future towards the improvemnet in business.

Since because the benifits accrue in future, we cannot deffer the expendituire spent now.

So it should be treated as Sales Promotional expenditure and expensed off in the year 2012 in full.

No defferment is allowed.