Assume a Company That Normally Expenses Advertising Costs Was to Capitalize

Multiple Choice

Assume a company that normally expenses advertising costs was to capitalize and amortize these costs over 3 years instead. After the third year net income would:

A) be higher, irrespective of the change in advertising costs.
B) be lower, irrespective of the change in advertising costs.
C) be higher only if advertising costs were increasing.
D) be lower only if advertising costs were increasing.