The Antarctica 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 $390,000 were assessed on April 1, 2013 and 2014, respectively. For the year ended December 31, 2014, the Antarctica Company would report property tax expense of
A) $360,000
B) $370,000
C) $382,500
D) $390,000

Question

Quizplus · Accepted Answer

The property tax expense for the year ended December 31, 2014 should include only the amount of property taxes that pertains to the period from January 1, 2014 to December 31, 2014. 
$390,000 property taxes were assessed on April 1, 2014, but only $390,000 × 9/12 = $292,500 relates to this period. 
Therefore, the property tax expense for the year ended December 31, 2014 is $360,000 + $292,500 = $652,500, and the answer is option C.

The Antarctica Company Closed Its Books Annually on December 31