Expense at the time of purchase

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Reference no: EM13153451

Is the purchase of equipment treated as an expense at the time of purchase? Why or why not?

a) No, GAAP requires that 10% of the cost be expensed each year. This minimizes attempts to mislead financial statement users.

b) Yes, the matching principle requires that the cost be expensed in the period of purchase.

c) No, the cost needs to be allocated to the years of expected use.

d) Yes, the actual life of the asset is not known, thus there is no acceptable way to allocate the cost.

Reference no: EM13153451

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