An accountant charged the Repairs Expense account for a tool that cost $12. The tool had an estimated useful life of 5 years; however, the accountant did not choose to depreciate it. The modifying convention that the accountant followed was

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The modifying convention that the accountant followed was materiality. Materiality means that an accountant can disregard an accounting convention or principle if the amount involved is insignificant or immaterial. In this case, the cost of the tool was only $12, and the estimated useful life was only 5 years, which implies that the amount is not significant, thereby leading the accountant to charge the Repairs Expense account instead of depreciating it.

An Accountant Charged the Repairs Expense Account for a Tool