Identify the errors in the notes and correct them. Specifically: Accounting adjustment: capitalising marketing expenditu

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Identify the errors
in the notes and correct them. Specifically:
Accounting adjustment: capitalising marketing expenditure
2020 2019 2018 2017 2016
Marketing expenditure (€ millions) 2,573 3,042 3,001 2,724
2,410
Assumptions for capitalising marketing expenditure as an
intangible asset: - Marketing spending occurs evenly throughout the
year. - Only half a year’s amortisation is taken on the latest
year’s spending. - Average expected life of marketing investments
is 4 years. - Amortisation of the intangible asset using the
straight-line method (with no residual value).
Note: Assume that the table and text above do not contain any
errors.
Findings:
- Capitalising marketing expenditure results in a marketing
asset of €2,573 million on 31 December 2020.
- Capitalising marketing expenditure results in a marketing
amortisation expense of €2,573 million in 2020.
- Capitalising marketing expenditure increases total assets.
- Capitalising marketing expenditure results in a lower asset
turnover.
- Capitalising marketing expenditure results in a lower
debt-to-equity ratio.
- Capitalising marketing expenditure increases the gross profit
margin.