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The expense recognition principle is a basic accounting principle that states that business expenses and revenues are recognized and matched to one accounting period toascertain the correct profit or loss.

1. The treatment that should be provided to the costs of the sample display houses is to charge them for more than one period. Sample display houses are treated as assets as they provide rights to future service power or financial benefits.

1. According to the principle of expense recognition, costs of service power should be amortized as assistance is provided. Hence, the costs of sample display houses should be matched with the revenue from the sale of houses which is yet to be paid for a period exceedingly more than a year. As the sample houses are left on a presentation for three to seven years. Daniel Barenboim expects to obtain benefits from the benefits obtained from the displays for at least that period.

1. If the entire shell houses are brought to be sold at the equilibrium price, it would be just to assign the costs of the number of shell houses sold. The assignment of costs should be similar to the units-of-production method of depreciation and would ultimately lead to better matching of costs with the revenues. However, if the shell houses are sold at unequal prices, the costs should be assigned based on the contribution of revenue of the shell houses sold.
2. There is unpredictability in association with the number of homes of a specific model which will be sold as a consequence of the display sample. The benefit of the amortization method is based on the fair estimates of the number and selling prices of shell houses to be sold. Cost amortization entirely based on time may be chosen when the time of the models can be anticipated with a huge deal more exactness than can the number of units which will be sold.