A driver started a business on 1st of January 2014,hiring out his limousine for special occasions.Current regulations require the business to purchase a license that will expire after two years.The cost of the license is $12,000.Calculate the amount of license expense to be included in the income statement for the 6 months ended 30 June 2014.
A) $6,000.
B) $4,000.
C) $3,000.
D) $12,000.

Question

Quizplus · Accepted Answer

The license cost of $12,000 is for two years, so the monthly expense is $12,000 / 24 = $500. For 6 months, the expense is $500 * 6 = $3,000.

A Driver Started a Business on 1st of January 2014,hiring