A driver started a business on 1 January 2014, hiring out his limousine for special occasions. Current regulations require the business to purchase a license that will expire after two years. The cost of the license is $12,000. Calculate the amount of license expense to be included in the income report for the 6 months ended 30 June 2014.
A) $12,000
B) $6,000
C) $4,000
D) $3,000

Question

Quizplus · Accepted Answer

The license cost of $12,000 covers two years (24 months), so the monthly expense is $12,000 / 24 = $500. For 6 months, the expense is $500 * 6 = $3,000.

A Driver Started a Business on 1 January 2014, Hiring