Why Would a Company Recognize the Cost of an Asset

question 27

Multiple Choice

Why would a company recognize the cost of an asset on its balance sheet rather than treat it as an expense on the date it is acquired?

• A)Conservatism requires this recognition.
• B)Matching requires costs to be matched against the related revenues of the asset.
• C)Strictly to record the amount in the most economically favorable manner possible for the company.
• D)The stable dollar concept will not allow inflation to be added to expenses, but does allow inflation to be added to assets.

---

Definitions:

Functionalism

A theoretical framework in psychology that emphasizes the roles and purposes of mind and behavior in adapting to the environment.

Edward Titchener

A British psychologist who is best known for developing the theory of structuralism and for his use of introspection in psychological research.

Behaviorism

A theory of learning based on the idea that all behaviors are acquired through conditioning without considering thoughts or feelings.

Cognitive Neuroscience

Cognitive neuroscience is the academic field that studies the biological processes and aspects that underlie cognition, with a specific focus on the neural connections in the brain.