Rental Expense and Prepayment ( video below)

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

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