Applying the Matching Concept}

Nevsky Properties Inc. completed construction of a new shopping centre in July 2018. During the first six months of 2018 , Nevsky spent \(\$ 550,000\) for salaries, preparation of documents, travel, and other similar activities associated with securing tenants for the centre. Nevsky was successful (Best Buy and Office Depot will be tenants) and the centre will open on August 1 with all its stores rented on four-year leases. The rental revenue that Nevsky expects to receive from the current tenants is \(\$ 8,500,000\) per year for four years. The leases will be renegotiated at the end of the fourth year. The accountant for Nevsky wonders whether the \(\$ 550,000\) should be expensed in 2018 or whether it should be initially recorded as an asset and matched against revenues over the four-year lease term.

Required:

Write a short statement indicating why you support expensing the \(\$ 550,000\) in the current period or spreading the expense over the four-year lease term.

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