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Barkley Inc prepaid for an insurance policy on July 31, Year 2, in the amount of $6,000. The entry to adjust the prepaid expense account on December 31, Year 2, would include which of the following?
Barkley needs to recognize insurance expense for 5 months (August-December). Insurance expense should be recorded at $500 per month ($6K/12 months). $500 x 5 months = $2,500, and this should be a credit to prepaid insurance to reduce that asset account.
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Beaumont Inc is finalizing its prepaid insurance account at December 31, Year 3. The account includes $15,000 for a general insurance policy beginning and paid for on December 1, Year 3; $4,000 for an auto policy beginning January 1, Year 4; and $12,000 paid key man life insurance policy running from July 1, Year 2, through June 30, Year 3. What amount should be reported as an expense in Beaumont's Year 3 income statement?
The company should expense what has been incurred as of the end of Year 3. This includes $1,250 for the general insurance policy ($15K/12 months x 1 month) and all $12K of the key man policy.
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Which of the following transactions would be initially recorded in the prepaid expense account?
Annual real estate taxes paid at the beginning of the year would be entered into prepaid taxes and then amortized to expenses throughout the year. Unearned revenue, immaterial prepaid subscriptions, and office supplies for the current period would not go to prepaid expenses.
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Of the following, which would be an intangible asset?
Of the following, goodwill is an intangible asset, R&D is an expense, investments are their own asset class, and leasehold improvements are capitalized.
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