Recording depreciation each period is necessary in accordance with thea. going concern principle. b. historical cost principle. c. expense recognition principle. d. asset valuation principle.

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Business

Patrick Alvarado

3 September, 23:27

Recording depreciation each period is necessary in accordance with thea. going concern principle. b. historical cost principle. c. expense recognition principle. d. asset valuation principle.

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Dawson Ayers · Answer 1

c. expense recognition principle

When a firm buys an asset that has a useful life of more than a year, it means that the cost of the asset should also be spread through out its life, the reason for this is that the asset is that this asset will create revenue for more than one year so its cost should also be split up. The expense recognition principle states that expenses should be recognized in the same period as the revenues to which they relate, and following this rule is the reason that depreciation is recorded in each period. If depreciation was not recorded and the asset was expensed the year it was bought, it would reduce the profits in the first year and increase them in the following years