BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Yahoo, Inc. recognizes depreciation expense for a machine over the 2-year period during which that machine helps the company earn revenue. Oracle Corporation reports information about pending lawsuits in the notes to its financial statements.

Detailed explanation-2: -According to the matching principle, the purchase price of a fixed asset is not related to the accounting period because the benefit derived from its use will be spread over a number of years. Therefore, only depreciation related to the accounting period is considered for determination of profit.

Detailed explanation-3: -Accrual accounting follows the matching principal, which states that revenues and expenses should be recorded in the same period. Accrual accounting is encouraged by International Financial Reporting Standards(IFRS) and Generally Accepted Accounting Principles (GAAP).

Detailed explanation-4: -Depreciation expense is recognized on the income statement as a non-cash expense that reduces the company’s net income. Accumulated depreciation appears in a contra asset account on the balance sheet reducing the gross amount of fixed assets reported.