Taylor,a Cash Basis Architect,rents the Building in Which His Office

question 90

Essay

Taylor,a cash basis architect,rents the building in which his office is located for $5,000 per month.He commenced his practice on February 1,2016.In order to guarantee no rent increases during an 18-month period,he signed an 18-month lease and prepaid the $90,000 on February 1,2016.How much can Taylor deduct as rent expense for 2016?

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Definitions:

Accounts Payable

Short-term liabilities or debts a company owes to its suppliers or creditors for goods and services received but not yet paid for.

Deferred Revenue

Income received by a company for goods or services yet to be delivered or performed, recognized as a liability on the balance sheet.

Utilities Expense

Utilities expense refers to the cost incurred by a business for the consumption of utility services such as electricity, water, and gas.

Accounts Payable

Liabilities or amounts owed by a company to creditors for goods and services that have been purchased on credit but not yet paid for.