Given the notion of the matching principle as guidance, ideally, what meaning should we be able to take away from the COGS and depreciation expenses recognized on the income statement by a company in any particular period? Since the information quality ideal is generally only what we aspire to achieve, and given the difficulties inherent to systematically allocating the cost of an asset to periods that benefit from it, how can we more realistically interpret the allocation of inventory and PP&E costs to the income statement? Can a gap between these two ideas impact real decisions? Further, let’s not forget about the asset impairment avenues for shifting additional costs between the balance sheet and income statement. Similar to the bad debt expense convention with accounts receivable, the lower of cost or market rule and depreciable asset and goodwill impairment options provide additional opportunities for discretion over the amount and timing of expense recognition related to these assets


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