Chico Corporation, a calendar-year accrual-basis corporation, paid $3,000 on April 1 for a property insurance policy for the next three years, prepaid six months interest of $450 on November 1, and paid $2,000 rent for December and January on December 1.What is his deduction in the current year for these expenses?
A)$1,900
B)$2,450
C)$2,600
D)$5,450

Question

Quizplus · Accepted Answer

Insurance expense for the current year is $1,000 (3,000/3). Interest expense for the current year is $225 (450/2). Rent expense for the current year is $1,200 (2,000/2). Total deduction for the current year is $1,000 + $225 + $1,200 = $2,425.

Chico Corporation, a Calendar-Year Accrual-Basis Corporation, Paid $3,000 on April