During 20X6, ABC, a limited liability company, paid a total of $15,000 for rent, covering the period from 1 October 20X5 to 31 March 20X7.
What figures should appear in the company’s financial statements for the year ended 31 December 20X6 ?
Answer
Statement of profit or loss and other comprehensive income
Rental Expense = $15,000 x 12/18 = $10,000
Statement of financial position
Prepayment = $15,000 x 3/18 = $2,500