On April 1, 2010, nPropel Corporation paid $48,000 cash for equipment that will be used in business operations. The equipment will be used for four years. nPropel records depreciation expense of $9,000 for the calendar year ending December 31, 2010. Which accounting principle has been violated? Why?
Depreciation principle, because depreciation expense is $12,000 per year.
No principle has been violated because P has correctly matched the expense for using the equipment to the period it generated revenue.
Matching principle because the cash was paid in 2010 and should be expensed in 2010.
Matching principle because depreciation expense should be $8,000.