During 2018, Fastow Ltd. incurred $50,000 of costs for marketing and advertising done during 2018. The marketing manager felt that these costs would increase the awareness of the company and brand equity so capitalized the costs (recorded as prepaid advertising asset) and will amortize the costs evenly into expenses over ten years.

Required:

a) What is the financial accounting issue? State as an issue statement/question as done in class.

b) What are the implications/impact of the issue to the financial statements?

c) What is your recommendation for the financial accounting issue?

d) Why did you recommend this?

- Support your answer using GAAP conceptual framework principles and

- APPLYING to the Fastows situation.