"Materiality is a subjective term". Discuss.
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A classic example of the materiality concept is a company expensing a $20 wastebasket in the year it is acquired instead of depreciating it over its useful life of 10 years. The matching principle directs you to record the wastebasket as an asset and then report depreciation expense of $2 a year for 10 years.
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an item may be material for one purpose while immaterial for another. The term materiality is a subjective term. The accountant should regard an item as material if there is a reason to believe that knowledge of it would influence decision of the informed investor.
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