(a) Explain the rationale for recognizing costs as expenses at the time of product sale.
(b) What is the rationale underlying the appropriateness of treating costs as expenses of a period instead
of assigning the costs to an asset? Explain.
(c) In what general circumstances would it be appropriate to treat a cost as an asset instead of as an
(d) Some expenses are assigned to specific accounting periods on the basis of systematic and rational
allocation of asset cost. Explain the underlying rationale for recognizing expenses on the basis of
systematic and rational allocation of asset cost.
(e) Identify the conditions under which it would be appropriate to treat a cost as a loss.
This question was asked on Apr 25, 2010.
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