Abc inc has just entered into the business of selling

Reference no: EM13600244

ABC, Inc. has just entered into the business of selling antique cars. The company management decided to lease the premises for the business instead of buying the office premises. They ended up paying an advance rent of $5 million dollars for the initial period of 5 years. The entire amount was recorded as an asset in the form of prepaid expense. When questioned by the auditors, the CFO of ABC, Inc. mentioned "An asset is just an expense waiting to happen." Discuss the validity and implications of this statement.

Reference no: EM13600244

Questions Cloud

Assume that the company expects to sell 40000 units next : due to erratic sales of its sole product- a disposable pocket camera - markline compnay has been experiencing

On nov 12 ms don amp co sold merchandise on account to : prepare a sales journal based on the information given and post it to the accounts receivable subsidiary ledger using

Challenges to convergence of igaap with us gaap include all : challenges to convergence of igaap with u.s. gaap include all of the following except-political issues result in

After spending 300000 for research and development chemists : after spending 300000 for research and development chemists at diversified citrus ind. have developed a new breakfast

Abc inc has just entered into the business of selling : abc inc. has just entered into the business of selling antique cars. the company management decided to lease the

The atgar corporation records all purchases and the : the atgar corporation records all purchases and the corresponding liabilities net of cash discounts. whenever it pays

You have been nominated by your institution for a seminar : you have been nominated by your institution for a seminar because of your proficiency in basic accounting concepts. the

Why are sales revenue and gross margin so important how do : why are sales revenue and gross margin so important? how do they influence the profitability and value of the

Lanier company began operations on january 1 2010 and uses : lanier company began operations on january 1 2010 and uses the fifo method in costing its raw material inventory.

User Account

All Pages