Question

Required information

[The following information applies to the questions displayed below.]
  

A company makes the payment of a one-year insurance premium of $3,096 on March 1, 2019.

d. If the premium had been $6,192 for a two-year period, how should the prepaid amount at December 31, 2019, be reported on the balance sheet?

	Non-current asset Current asset

Answer 1

Requirement d:

Non-current Assets	$516
Current Assets	$3,612

Calculations:

Prepaid insurance, Mar 1,2019	$6,192
Insurance expired [ Mar 1,2019 to Dec 31,2019] [$6,192 x (10/24)]	($2,580)
Prepaid insurance, Dec 31,2019	$3,612
Prepaid insurance, Dec 31,2019	$3,612
Current assets [Jan 1,2020 to Dec 31,2020]   [$6,192 x (12/24)]	($3,096)
Non-current assets	$516