Question

3/11/2014	12/18/2014		1,166.67
12/19/2013	12/18/2014		5,800.00
5/29/2014	5/28/2015		7,600.00
12/26/2013	7/25/2014		500.00
7/26/2014	7/25/2015		750.00
1/1/2014	12/31/2014		4,200.00
3/6/2014	3/6/2015		4,670.00
3/6/2013	3/6/2014		4,670.00

The above information contains the terms and invoice amounts for several prepaid expenses. Calculate the monthly amortization for each (include equations) and determine the balances for each as of 12/31/2014. Use quarter of a month depreciation.

Answer 1

Quarter of a Month depreciation means if the prepaid expense is incurred before 15th of a month then the full month expense will be charged to that month. If the prepaid expense was incurred after 15th of a month then only half of the months prepaid expense is charged to that month.

if we take example of

1) 5,800- 19th dec 2013 to 18th Dec 2014 so for dec 2013 the amortisation will be for half of the month since the expense was incurred after 15th of that month. therefore 5800/12(months)=483.33 per month. so half of 483.33 is 241.67. this amount will be taken for dec 2013 and other months will have full month amortisation i.e 483.33.

no. of months	10	12	12	7	12	12	12	12
prepaid value	1,166.67	5,800.00	7,600.00	500.00	750.00	4,200.00	4,670.00	4,670.00
dd-mm-yy	11-03-2014	19-12-2013	29-05-2014	26-12-2013	26-07-2014	01-01-2014	06-03-2014	06-03-2013
dd-mm-yy	18-12-2014	18-12-2014	28-05-2015	25-07-2014	25-07-2015	31-12-2014	06-03-2015	06-03-2014
2013
March	116.667							389.17
April	116.667							389.17
May	116.667							389.17
june	116.667							389.17
july	116.667							389.17
aug	116.667							389.17
sept	116.667							389.17
oct	116.667							389.17
nov	116.667							389.17
dec	116.667	241.67		35.38				389.17
2014 Jan		483.33		70.75		350.00		389.17
feb		483.33		70.75		350.00		389.13
mar		483.33		70.75		350.00	389.17
apr		483.33		70.75		350.00	389.17
may		483.33	316.67	70.75		350.00	389.17
june		483.33	633.33	70.75		350.00	389.17
july		483.33	633.33	40.09	31.25	350.00	389.17
aug		483.33	633.33		62.50	350.00	389.17
sept		483.33	633.33		62.50	350.00	389.17
oct		483.33	633.33		62.50	350.00	389.17
nov		483.33	633.33		62.50	350.00	389.17
dec		241.70	633.33		62.50	350.00	389.17
Total	1166.67	5800	4749.9765	499.9983	343.75	4200	3891.667	4670
outstanding	-	-	2,850.02	0.00	406.25	-	778.33	-