The cost of a long-term asset, such as equipment, is transferred to expense as it is used during its useful life.

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This is known as the "matching principle" in accounting, where the cost of an asset is gradually recognized as an expense over its useful life. This is done through depreciation expense, which is a non-cash expense that reduces the value of the asset on the balance sheet while simultaneously reducing taxable income.

The Cost of a Long-Term Asset, Such as Equipment, Is