Suppose that Mr. Gizmo, chief executive officer of Galaxy Enterprises, purchased a piece of machinery at the
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Suppose that Mr. Gizmo, chief executive officer of Galaxy Enterprises, purchased a piece of machinery at the beginning of 1997 and wants net income on the income statement of that year to be as high as possible. He has the choice of depreciating the machinery over five or ten years. Which ofthe two choices will he take? Is it clear which of the two choices is a better application of the matching principle? Why or why not?
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