When Ford Motor Company expenses a $200 tool used in manufacturing, instead of capitalizing its cost as an asset, it does so because of the conservatism convention.

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When a company expenses a tool used in manufacturing, they are treating it as a regular expense rather than an asset that can be depreciated over time. This is typically done for smaller purchases that do not have a significant impact on the company's financial statements. The conservatism convention would dictate that a company should err on the side of caution when reporting financial results, but in this case, expensing the tool may not necessarily be more conservative than capitalizing it as an asset.

When Ford Motor Company Expenses a $200 Tool Used in Manufacturing