Final answer:
The amount of expense each company should recognize in December is based on the expenses that correspond to the revenues earned in the same period, in accordance with the matching principle. An example calculation shows that if a firm's revenues and expenses are known, their accounting profit can be determined by subtracting the total expenses from the total revenues.
Step-by-step explanation:
For each of the following separate situations, determine the amount of expense each company should recognize in December requires an understanding of accounting principles, particularly the matching principle. The matching principle instructs that expenses should be matched with the revenues they help to generate in the same period. Using the given example, if a firm had sales revenue of $1 million last year and its expenses were $600,000 on labor, $150,000 on capital, and $200,000 on materials, the firm's accounting profit can be calculated as follows:
- Total Revenue: $1,000,000
- Total Expenses: Labor ($600,000) + Capital ($150,000) + Materials ($200,000) = $950,000
- Accounting Profit: Total Revenue - Total Expenses = $1,000,000 - $950,000 = $50,000
To answer the question directly, each company should recognize expenses incurred in December that are directly related to the revenue earned in December. If additional context or numbers were provided for the separate situations, a precise expense amount could be calculated for each company.