Campbell County uses the consumption method to record all inventories and prepayments.The City has a 9/30 fiscal year-end.On April 1, 2000, the County purchased a two-year insurance policy at a total cost of $400,000, paying for the policy out of the General Fund.On the General Fund financial statements, the amount of insurance expenditures for the fiscal year ended 9/30/00 would be

Question

Quizplus · Accepted Answer

The insurance policy covers two years, so the cost should be allocated over the policy period. For the fiscal year ending 9/30/00, only six months of the policy (April to September) should be expensed, which is $100,000 ($400,000 / 24 months * 6 months).

Campbell County Uses the Consumption Method to Record All Inventories