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    ruileal's Avatar
    ruileal Posts: 1, Reputation: 1
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    #1

    Apr 24, 2012, 12:03 PM
    Prepaid rent deposit
    My daughter opened a beauty salon last June.

    She paid a 3 months rent deposit (£2800.00) which she will get back in the end of the 3 years lease.

    She got 3 months free rent to to some renovation work.

    Can I categorize the deposit as rent and goes to the P&L as an expense or goes to the balance sheet as prepayments.
    Thank you in advance

    Thank you

    Rui
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
    Ultra Member
    		  
    #2

    Apr 25, 2012, 10:41 AM
    A Prepayment is a current asset because you have not used the payment yet. When the payment is used it transfers from the prepayment account into the expense account.
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