The premium on a three-year insurance policy purchased on June 30,2015,was $36,000.What is the amount of insurance expense that should be presented on the company's income statement for the year ended December 31,2015?
A) $500.
B) $1,000.
C) $3,000.
D) $6,000.
E) $8,000.

Question

Quizplus · Accepted Answer

The insurance expense for the year ended December 31, 2015, is calculated by determining the expense for the six months from July 1, 2015, to December 31, 2015. The annual premium is $12,000 ($36,000/3 years), so for six months, the expense is $6,000 ($12,000/2).

The Premium on a Three-Year Insurance Policy Purchased on June