The income for National Company is expected to be unusually high this year. The controller believes in income smoothing. He proposes to "expense" the entire cost of a delivery truck ($100,000) just purchased.
1. Based on generally accepted accounting principles, do you agree or disagree with the controller's proposal? Explain. Build your case with convincing arguments. Your answer should consider the accounting definitions and the following qualities: consistency, materiality, comparability, relevance, reliability, conservatism, neutrality.
2. If you were a stockholder of National Company, would it make any difference to you if the truck was fully expensed or not in the year of purchase? Explain.