If it is not probable that expenditure will generate future benefits,the accounting treatment should be:
A) to treat it as a deferred asset.
B) to amortise it over a period of no more than two operating cycles.
C) to expense it.
D) to treat it as unearned revenue.

Question

Quizplus · Accepted Answer

If it is not probable that an expenditure will generate future benefits, it should be expensed immediately rather than being capitalized as an asset or deferred asset. This is because an asset represents a future economic benefit, and if there is no probability of future economic benefit, then the expenditure should not be recorded as an asset. Amortization, treating it as unearned revenue, or treating it as a deferred asset would not be appropriate in this scenario.

If It Is Not Probable That Expenditure Will Generate Future