PRC-1 · Chapter 4 · Question 97 of 100
An entity received a Rs. 720,000 rental payment for an 18-month lease starting on July 1. Its financial year ends on December 31. What amount will be classified as a current liability at year-end?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 480,000
Explanation
The lease runs for 18 months (40k/month). By Dec 31, 6 months (240k) are earned. The remaining 12 months (480k) are unearned and will be fulfilled over the next 12 months, making it entirely a current liability.
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