Business Finance
business and finance question

Question Description

Does it make sense that longer-lived assets should be expensed over the life rather than in the year the item is paid for?

Final Answer

Yes, it does.  One of the fundamental tenets of accounting is that expenses and revenues should be "matched".  That is, we aim to recognize the expenses associated with generating revenue at the time the revenue is generated.  For example, if a business buys a car that it will use to deliver its products, and it is expected that the car will be used for the next 10 years to do so, then it wouldn't make sense to recognize the entire expense of the car upon purchase (as it will be used to deliver product - thus generate revenue - for the next 10 years).

Please feel free to approach me directly with questions in the future.  Thanks.

Alex Z (997)
New York University

Top quality work from this tutor! I’ll be back!

Just what I needed… fantastic!

Use Studypool every time I am stuck with an assignment I need guidance.


Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors