Case 14-3
PolyMedica Corporation (A)
Prepared by
Tamara Hurst
for Professor C.E. Reese
in partial fulfillment of the requirements for
MAN 560-Finance for Non-Financial Managers
School of Business/Graduate Studies
...
Case 14-3
PolyMedica Corporation (A)
Prepared by
Tamara Hurst
for Professor C.E. Reese
in partial fulfillment of the requirements for
MAN 560-Finance for Non-Financial Managers
School of Business/Graduate Studies
St. Thomas University
Miami Gardens, Fla.
Term 6/Fall, 2017
September 2, 2017
https://www.coursehero.com/file/25024334/Case-14-3-PolyMedica-Cooperationdocx/
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Issues………………………………………………………………………………………………1
Facts……………………………………………………………………………………………..1-2
Analysis…………………………………………………………………………………………2-6
Conclusions………………………………………………………………………………………..6
Appendices………………………………………………………………………………………...7
Appendix A “Additional Recommendations”……………………………………………………7
2
https://www.coursehero.com/file/25024334/Case-14-3-PolyMedica-Cooperationdocx/
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shared via CourseHero.comIssues
1. Explain the difference between an asset and an expense.
2. Explain the role of advertising in the company’s customer-acquisition strategy.
3a. What are the arguments in favor of capitalizing the direct-response advertising
expenditures?
b. What are the arguments in favor expensing the direct-response advertising expenditures
as incurred?
c. As a CEO of PolyMedica, would you favor capitalizing or expensing the direct-response
advertising costs?
4. What would be the impact of the company’s financial statement if PolyMedica had
expensed the cost as incurred in 2003 and 2002? Calculate key balances that highlights
any major differences.
5. As a CEO of the PolyMedica, how might you respond to this direct-response advertising
accounting issue raised by the SEC and short sellers?
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