For each of the situations described below, indicate the underlying accounting principle that is being violated. Choose from the following principles:
Matching | Materiality |
Cost | Realization |
Objectivity |
|
If you do not believe that the practice violates any of these principles, answer “None” and explain.
a. The bookkeeper of a large metropolitan auto dealership depreciates the $7.20 cost of metal wastebaskets over a period of 10 years.
b. A small commuter airline recognizes no depreciation expense on its aircraft because the planes are maintained in “as good as new” condition.
c. Palm Beach Hotel recognizes room rental revenue on the date that a reservation is received. For the winter season, many guests make reservations as much as a year in advance.
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