Rent Accounting for ASC 842: Prepaid Rent, Journal Entries, and More
Under accrual accounting, this company would record a prepaid rent asset of $120,000. Each month, $10,000 would be expensed, reducing the prepaid rent asset and recognizing the rent expense in the income statement. This methodical approach ensures that the company’s financial statements accurately reflect the economic reality of the lease agreement. Accrual accounting plays a…
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