ABB Group (ABB), headquartered in Switzerland, is one of the world\'s largest en
ID: 2350893 • Letter: A
Question
ABB Group (ABB), headquartered in Switzerland, is one of the world's largest engineering companies. ABB applies U.S. GAAP, and reports its results in millions of U.S. dollars. Based on ABB's financial reports for fiscal 2007, at January 1, 2007, ABB reported a balance in its Prepaid Rent account of $247 million; assume that this amount reflects its prepayments of rent on factory and office space for the next month. Assume also that on January 31, 2007, ABB paid $3,200 million as the annual rent for the period from February 1, 2007, to January 31, 2008. ABB has a calendar year reporting period.December 31
Rent Expense: ______ |
Prepaid Rent: | ________
To record the adjusting entry for the consumption of the prepaid portion of rent expense for the months of February through December.
Explanation / Answer
Note : Pl ignore above soln & use below soln
Prepaid Rent for 12 Mon from Feb'07 to Jan'08 = $3200M
So Rent pm = $3200/12 = 267M
So Rent for 11Moonth = 3200-267 = $2,933
Add Rent for Jan'07 = 247
So Total rent paid during Year = 2933+247 = 3180
December 31, 2007 Rent Expense Dr $3180
Prepaid Rent Cr $3180
To record the adjusting entry for the consumption of the prepaid portion of rent expense for the months of February through December.