PRC-1 · Chapter 4 · Question 77 of 100
An entity paid Rs. 36,000 for a 12-month commercial insurance policy beginning on April 1. The financial year ends on December 31. What is the insurance expense to be recognized for the year?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 27,000
Explanation
The policy covers 9 months in the current financial year (April to December). Therefore, the expense recognized is 36,000 x (9/12) = Rs. 27,000.
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