The Ancira Company closed its books annually on December 31, while the city in which it is located has a fiscal year beginning on April 1 and ending on March 31.Taxes on property are assessed on April 1 of each year.Property taxes in the amount of $360, 000 and $400, 000 were assessed on April 1, 2010 and 2011, respectively.For the year ended December 31, 2011, the Ancira Company would report property tax expense of

Question

Quizplus · Accepted Answer

The property tax expense reported by the Ancira Company for the year ended December 31, 2011 would include the property taxes assessed from April 1, 2011 to December 31, 2011, which amounts to $266,667 ($400,000/12 months x 9 months). In addition, the property taxes assessed from January 1, 2011 to March 31, 2011, which is the prior fiscal year of the city, would also be included as a current year expense since the company closed its books on December 31, 2011. This amounts to $133,333 ($400,000/12 months x 3 months). Therefore, the total property tax expense for the year ended December 31, 2011 would be $400,000, which is the sum of $266,667 and $133,333. Choice D is the correct answer.

The Ancira Company Closed Its Books Annually on December 31