8. Wilhelm Corporation expenses the purchase of new manufacturing equipment Principle Qualitative Charactertic

**Principle:** Matching Principle<br /><br />**Qualitative Characteristic:** Faithful Representation<br /><br />The **matching principle** dictates that expenses should be recognized in the same period as the revenues they help generate. Since the manufacturing equipment will be used to produce goods over multiple periods, its cost should be allocated (via depreciation) to those periods, rather than expensed entirely when purchased. Expensing the entire cost immediately violates the matching principle.<br /><br />**Faithful representation** means that financial information accurately depicts what really happened. Expensing the equipment immediately doesn't faithfully represent the consumption of the equipment's benefit. The benefit (and therefore the cost) is spread out over the equipment's useful life.<br />