Jackson Transportation purchases many pieces of office furniture with an individual cost below $200 each.Jackson chooses to account for these expenditures as expenses when acquired rather than reporting them as property,plant,and equipment on its balance sheet.The company's accountant and independent CPA agree that no accounting principle has been violated.What accounting justification allows Jackson to expense the furniture?

Question

Quizplus · Accepted Answer

Materiality principle allows the company to expense items that have low individual cost and do not significantly impact the financial statements. Since the individual cost of the furniture is below $200, it is considered immaterial and can be treated as expenses rather than assets.

Jackson Transportation Purchases Many Pieces of Office Furniture with an Individual