A Fortune-500 company purchases a new clock which is expected to last for five years for $35.According to the materiality threshold,this would be treated as an ________ in the accounting records.
A)asset
B)expense
C)equipment
D)none of the above

Question

Quizplus · Accepted Answer

According to the materiality threshold, the cost of the clock is not significant enough to be recorded as an asset or equipment. Instead, it is considered an expense as it is a one-time purchase with a lifespan of less than a year (which is the typical threshold for capitalizing assets). Therefore, the correct answer is B) expense.

A Fortune-500 Company Purchases a New Clock Which Is Expected