Company "Z" on 21 December 2019 paid euros 600.000 for an advertising campaign. The advertisements will appear on magazines between 1 January and 31 August 2020. Your client believes that, as a result, sales will increase by 70% in 2020 (over 2019 levels) and by 30% in 2021 (over 2019 levels). There will be no further benefits.

Required:

1.Assume that you are an accounting regulator/standard setter and explain a preparatory work explaining your views and different alternatives on how this item should be treated in the accounts for each of the three years. Your answer should include explicit reference to: -relevant traditional accounting conventions -the requirements of users of published financial accounts (e.g. investors, creditor...). Then develop a related accounting standard regulating Advertising expenditure according to your choice among alternatives.

2.Assume that you are the company's CFO (Chief Financial Officer). What accounting treatment do you apply to advertising expenditures to comply with IFRS regulation?