Question
Furniture .com uses automated shipping equipment. Early in the year, Furniture.com purchased equipment at a cost of $400,000. Management expects the equipment to remain in
Furniture .com uses automated shipping equipment. Early in the year, Furniture.com purchased equipment at a cost of $400,000. Management expects the equipment to remain in service for five years, with zero residual value. Furniture.com plans on using the straight line depreciation. Mason Green is finalizing the depreciation expense calculation for the year when Furniture.coms controller, Flynn Steel, tells Mason to expense the entire cost of the equipment instead of capitalizing the equipment at the time of purchase. Flynn argues that the company wont worry about recording depreciation for the next five years the accounting will just be easier. What should Mason do? What would you do?
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