If annual major repairs made in the first quarter and paid for in the second quarter clearly benefit the entire year, when should they be expensed?
A) An allocated portion in each of the last three quarters
B) An allocated portion in each quarter of the year
C) In full in the first quarter
D) In full in the second quarter

Question

Quizplus · Accepted Answer

The costs should be expensed in an allocated portion in each quarter of the year because they benefit the entire year, aligning with the matching principle of accounting which states that expenses should be recognized in the period in which they help to generate revenues.

If Annual Major Repairs Made in the First Quarter and Paid