Green Realty paid $6,000 rent on a building in advance for two years on May 1. The amount that should be recorded as rent expense as of December 31 at the end of Year 1 is:

Question

Quizplus · Accepted Answer

The rent expense for the first year is $6,000/2 = $3,000. Since the rent was paid in advance, the rent expense for the first year has already been incurred and should be recorded as of December 31 at the end of Year 1.

Green Realty Paid $6,000 Rent on a Building in Advance