Inscrivez-vous ou connectez-vous pour rejoindre votre communauté professionnelle.
Costs should be capitalized or recorded as assets when the costs have not expired and they have future economic value. For example, on November25 a company pays $12,000 for property insurance covering the six months of December through May. The $12,000 is initially recorded as the current asset Prepaid Insurance. On November30 the company will report this asset at $12,000 since the $12,000 has a future economic value. (It will save making future payments of cash for insurance coverage.) On December31 the asset will be reported as $10,000---the unexpired cost. It will also report Insurance Expense for the month of December as $2,000---the cost that has expired during December. On January31 the asset will be reported at the unexpired cost of $8,000. January's insurance expense will be $2,000---the amount that has expired during January.
