Proposals that require large outlays are more

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: nd are reviewed by finance personnel. Proposals that require large outlays are more carefully scrutinized than less costly ones. 2. Review and analysis. Formal review and analysis is performed to assess the appropriateness of proposals and evaluate their economic viability. Once the analysis is complete, a summary report is submitted to decision makers. 1. Some firms do, in effect, capitalize advertising outlays if there is reason to believe that the benefit of the outlay will be received at some future date. The capitalized advertising may appear as a deferred charge such as “deferred advertising expense,” which is then amortized over the future. Expenses of this type are often deferred for reporting purposes to increase reported earnings, whereas for tax purposes, the entire amount is expensed to reduce tax liability. CHAPTER 8 TABLE 8.1 Capital Budgeting Cash Flows 357 Key Motives for Making Capital Expenditures Motive Description Expansion The most common motive for a capital expenditure is to expand the level of operations—usually...
View Full Document

This document was uploaded on 01/19/2014.

Ask a homework question - tutors are online