Deferred expenses PDF

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Deferred expenses - Question and solution...

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Activity 4.01b: Simple deferred expense – Kruiz Limited Kruiz Limited reports under IFRS and prepares accounts to 30 September. In August 2019 the company was charged £45,000 rent for the quarter ending 31 December 2019. Show the accounting periods, mark the date of the charge of rent and indicate the period over which the rent relates. Step 1 Draw a timeline.

First accounting period

Next accounting period 30

30

Write the year end dates for each accounting period

Se

Se

p

p

20

20

20

19

£45,000

Identify the period in which activity occurs

Mark the date of the transaction

Activity 4.02b: Simple deferred expense – Kruiz Limited (1) Calculate the value of deferred expenses at the year end. (2) Set out the journal for recording the transaction. (1) Calculate the value of deferred expenses. The whole amount of the expense relates to the following accounting period, so the value of deferred expenses at 30 September 2019 is £45,000. (2) Set out the journals for recording the transaction. (a) The original transaction Dr Cr

Rent and rates (expenses) Accounts payable (liability)

45,000 45,000

Assume that a charge for something is not the same as paying for it, so credit accounts payable, not cash (b) The adjustment at the year end for deferred expenses Dr Cr

Deferred expenses (assets) Rent and rates (expenses)

45,000 45,000...