Mason Corp. has estimated that total depreciation expense for the 2020 calendar year will be $ 240,000, and that 2020 year-end bonuses to employees will be $ 480,000. In Mason's interim income statement for the six months ended June 30, 2020, what total expense relating to these two items should be reported?

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Quizplus · Accepted Answer

For interim financial reporting, expenses that accrue throughout the year, like depreciation and employee bonuses, should be recognized in the periods in which they occur. Therefore, for a six-month interim period, half of the annual depreciation expense ($240,000 / 2 = $120,000) and half of the annual bonuses ($480,000 / 2 = $240,000) should be reported, totaling $360,000.