Rent Expense Archives

Explain how would recording the $7,000 million to the Equipment account “delay expense recognition to future periodS” and thus “boost net income for Year 1.”

By EzekielPosted on November 29, 2021Posted in AccountingTagged Capitalization, collegeessays, Depreciation, essayhelp, Rent Expense

Instructions: Assume that WorldCom paid $7,000 million (i.e. $7 billion or $7,000,000,000) rental fees to other phone companies in cash at the beginning of Year 1. Instead of correctly debiting the ‘Rent Expense” account (i.e. as a revenue expenditure), WorldCom debited $7,000 million to the “Equipment” account (i.e. as a capital expenditure). And, assume that […]