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This Subtopic provides guidance on the financial reporting of start-up and organization costs. This Subtopic defines start-up activities and provides Examples to help entities determine which costs fall within the scope and outside the scope of this Subtopic.

This Subtopic provides guidance for annual financial statements on the following:

1. Reporting the costs of advertising, which shall be expensed either as incurred or the first time the advertising takes place
2. The financial statement disclosures that shall be made about advertising.

This Subtopic does not provide guidance for direct-response advertising (see Subtopic 340-20) whose primary purpose is to elicit sales to customers who can be shown to have responded specifically to the advertising and that results in probable future benefits. If future economic benefits do result from advertising, they generally would be in the form of revenue. New technology, sources of information, and measurement techniques have given some entities the ability to better estimate the future economic benefits that could result from certain kinds of advertising.

This Subtopic provides guidance on accounting for historical electronic equipment waste held by private households[ for obligations associated with Directive 2002/96/EC on Waste Electrical and Electronic Equipment adopted by the European Union.

This Subtopic refers to and paraphrases various provisions of the Directive. Nothing in this Subtopic shall be considered a definitive interpretation of any provision of the Directive for any purpose.

The Directive distinguishes between new and historical waste. New waste relates to products put on the market after August 13, 2005. All products put on the market on or before August 13, 2005, are deemed to be historical waste equipment for the purposes of the Directive. This Subtopic does not address the accounting for new waste. As explained in paragraph 410-20-55-23, costs relating to waste of new equipment are to be borne solely by the producers of the new equipment.

For the financing of historical waste, the Directive also distinguishes between historical waste from private households and historical waste from users other than private households (commercial users). This Subtopic provides guidance for historical waste from private households, while Subtopic 410-20 provides guidance for historical waste from commercial users.

This Subtopic provides guidance on costs associated with business process reengineering and information technology transformation projects. The following describes such projects.

To take advantage of new advances in electronic commerce and in computer technologies, many entities are entering into consulting contracts that combine business process reengineering and information technology transformation. Consulting services may encompass software development, software acquisition, software implementation, training, and ongoing support. Business process reengineering may be a component of some of those activities.

Information technology transformation projects that involve software packages (sometimes called enterprise software) recently have been undertaken by entities that must reengineer their business processes to connect into that software rather than modify that software to connect into their existing business processes. The transformation project may include the installation of new computer hardware, the purchase of office equipment, furniture, or work stations, and the physical reconfiguration of the work area.

This Subtopic provides guidance on the annual fees paid by pharmaceutical manufacturers and health insurers to the U.S. Treasury in accordance with the Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act (the Acts).

The Acts impose annual fees on the pharmaceutical manufacturing industry for each calendar year beginning on or after January 1, 2011, and on the health insurance industry for each calendar year beginning on or after January 1, 2014. An entity’s portion of the annual fee is payable no later than September 30 of the applicable calendar year and is not tax deductible.

For the pharmaceutical manufacturing industry, the annual fee will be allocated to individual pharmaceutical manufacturers on the basis of the amount of their branded prescription drug sales for the preceding year as a percentage of the industry’s branded prescription drug sales for the same period. A pharmaceutical manufacturing entity’s portion of the annual fee becomes payable to the U.S. Treasury once the entity has a gross receipt from branded prescription drug sales to any specified government program or in accordance with coverage under any government program for each calendar year beginning on or after January 1, 2011.

For the health insurance industry, the annual fee will be allocated to individual health insurers based on the ratio of the amount of an entity’s net premiums written during the preceding calendar year to the amount of health insurance for any U.S. health risk that is written during the preceding calendar year. A health insurance entity’s portion of the annual fee becomes payable to the U.S. Treasury once the entity provides health insurance for any U.S. health risk for each calendar year beginning on or after January 1, 2014.