Is the purchase of equipment treated as an expense at the time of purchase? Why or why not? No, the cost needs to be allocated to the years of expected use. Yes, the matching principle requires that the cost be expensed in the period of purchase.

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Is the purchase of equipment treated as an expense at the time of purchase? Why or why not? No, the cost needs to be allocated to the years of expected use. Yes, the matching principle requires that the cost be expensed in the period of purchase. Yes, the actual life of the asset is not known, thus there is no acceptable way to allocate the cost. No, GAAP requires that 10% of the cost be expensed each year. This minimizes attempts to mislead financial statement users.

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