A practical decision to expense small capital expenditures rather than record them as property, plant, and equipment and depreciate them probably is made on the basis of the convention of
A) conservatism.
B) consistency.
C) materiality.
D) full disclosure.

Question

Quizplus · Accepted Answer

The practical decision to expense small capital expenditures rather than record them as property, plant, and equipment and depreciate them is usually made based on the materiality convention. Materiality convention suggests that financial statements should only include information that is significant or material to its users. For small expenditures, the cost of recording and depreciating them may outweigh the benefits of providing that information. Therefore, it is appropriate to expense such costs when they are not material.

A Practical Decision to Expense Small Capital Expenditures Rather Than