Question

Advertisement expense ₹ 80,000 paid for 2 years from 1st Jan. 2022. Calculate prepaid advertisement expense for the year ended on 31st March, 2022.

Answer 1

Advertisement expense paid for 2 years from 1st Jan. 2022.

∴ Upto 31-3-2022, 3 months advertisement expense can be calculated as follows.

`= 80,000 xx 3/24 = ₹ 10,000`

∴ Prepaid advertisement expense = Advertisement expense – Current year’s amount

= 80,000 - 10,000

= ₹ 70,000