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During 2004, B a limited comp, paid a total of $60000 for rent covering the period from 1st Oct 2003 to 31st march 2005
What figures should appear in the company SOPL and SOFP for the year ended 31st DEC 2004
Sir…
How to do this sum??Here 60000*12\18….why is that so??
The payment was for 18 months 1 Oct 2003 to 31 Mar 2005.
In the SOPL for the year to Dec 2004, we need the expense for those 12 months, which is therefore 12/18 x $60,000.
As at 31 Dec 2004 they have still overpaid for the period from 1 Jan 1005 to 31 March 2005, which is 3 months.
Therefore in the SOFP there is a prepayment of 3/18 x 60,000.Have you watched the free lectures on accruals and prepayments? The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well.
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