ICAEW AF · Chapter 8 · Question 5 of 9
A business's year ends on 31 December 20X5. It pays rent of £18,000 per year until 31 March 20X5, after which the rent increases to £21,600 per year. What is the rent expense for the year to 31 December 20X5?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) £20,700
Explanation
The expense must reflect the rate in force in each part of the year. January to March: 3/12 x £18,000 = £4,500. April to December: 9/12 x £21,600 = £16,200. Total rent expense = £20,700.
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