As someone who studied accountancy, let me clue you into a secret: there is only one "rule" of double entry: Something Owned = Something Owed.
Call it Asset = Liabilities, divide those liabilities into owner vs external, divide those assets into current vs long term, those are just externalities that we tacked on so that every one is on the same page.
If you want to put an asset with a working lifetime of 10 years, all into one year, double entry will not stop you. Debit Asset, Credit Cash, boom it's done, your books will balance.
It's who decide, hang on, this asset will be useful for 10 years, it would be more true and fair if we divide this value over the 10 years.
And that's the unspoken law of accountancy, Captain true and fair from IFRS HQ to the rescue, to make sure every one's books make "sense" and are "accurate" and "comparable" and what not.
But if the taxperson decides, hand on, other people's machines last for 12 years, so you too must divide the machine's cost over 12 years or get a penalty from us... guess what, we now have the first actual law: Whatever the local law says, is how we will do it, and if we have to keep multiple books so that accounts comply with all the various jurisdictions, so be it.
Most companies I know have two set of account reporting, one that complies with IFRS and one that complies with local GAAP, with some sort of reconciliation paper to keep track of the changes between each.
But at the end, it boils down to the same thing, everything owned = everything owed.
Call it Asset = Liabilities, divide those liabilities into owner vs external, divide those assets into current vs long term, those are just externalities that we tacked on so that every one is on the same page.
If you want to put an asset with a working lifetime of 10 years, all into one year, double entry will not stop you. Debit Asset, Credit Cash, boom it's done, your books will balance.
It's who decide, hang on, this asset will be useful for 10 years, it would be more true and fair if we divide this value over the 10 years.
And that's the unspoken law of accountancy, Captain true and fair from IFRS HQ to the rescue, to make sure every one's books make "sense" and are "accurate" and "comparable" and what not.
But if the taxperson decides, hand on, other people's machines last for 12 years, so you too must divide the machine's cost over 12 years or get a penalty from us... guess what, we now have the first actual law: Whatever the local law says, is how we will do it, and if we have to keep multiple books so that accounts comply with all the various jurisdictions, so be it.
Most companies I know have two set of account reporting, one that complies with IFRS and one that complies with local GAAP, with some sort of reconciliation paper to keep track of the changes between each.
But at the end, it boils down to the same thing, everything owned = everything owed.