Question

GAAP and IFRS accounting initial costs to acquire natural resources

a. To increase reported assets
b. To match expenses with revenues
c. To facilitate tax deductions
d. To comply with industry standards

Answer 1

Accounting for initial costs to acquire natural resources under GAAP and IFRS is aimed at matching expenses with revenues, in compliance with the matching principle.

Step-by-step explanation:

When accounting for the initial costs to acquire natural resources, GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards) both aim to match expenses with revenues. This reflects the practice of capitalizing initial costs as assets and then amortizing them over the period they provide economic benefits. This allocation ensures that the cost of the resource is spread out across its useful life, aligning the expenses with the revenues they help to generate. Such accounting practices comply with the matching principle, which is a fundamental accounting concept under both GAAP and IFRS.