Managerial Accounting

The principal incremental contract acquisition costs are:

a. A 50,000 commission fee paid to an agent who had worked directly with the policyholder. The fee was due to the agent when the policyholder signed the contract and was paid immediately upon signing.

b. A20,000costofmarketingeffortsincurredoverthepastsixmonthstopromoteHomeUmbrellathroughbroad-based advertising (50%) and targeted phone calls (50%) to existing customers as part of a cross-selling strategy. The policyholder, who had just bought herapartment, was already using for her car liability insurance.

Question: Would you capitalize any of the above acquisition costs, Would you expense them immediately? If you were to capitalize the costs, over what period would you amortize them Identifythealternativesyourejectedandyourreasonsforrejectingthem. Donotdismissanalternativeorreachadecisiononthegroundsof"immateriality."Ifyoumake any assumptions, please state them.