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:

Integrity

The characteristic of upholding honesty and solid ethical standards, or the condition of being complete and unified.

State

A distinct and structured condition or phase that something or someone is in at a specific time.

Design View

A mode in database and web development applications that allows users to graphically arrange components or structure without writing code.

Allow Multiple Values

A feature in databases or forms that permits users to select or input more than one value for a given field.