1) Review situation (3) from the case. Apply the expense recognition criteria to the situation (3) and determine if the accounting is correct or not. Use the definitions of the “elements” of financial reporting to explain your answer.

Situation (3): During the last week of December, the company had run a promotional campaign in the local newspaper. The cost of the campaign was $3,500. Alphonzo recorded it as a prepaid expense because he anticipates that January 2020 sales will be higher as a result of the campaign.