We have an Insurance policy for a project for four years with a total premium amount of US $ 48,000/-, due to the long relationship with insurance company, they agreed to pay insurance by 24 months instead of the usual practice of payment on policy issue date. As on 31st December 2016 US$ 8000/- was pending and settled the full amount April 2017.
Project Period : 1 Sept 2015 to 31 Aug 2019
Policy period : 1 May 2015 to 31 Aug 2019 (Policy issued 5 months prior to start project for signing the contract agreement)
Premium payment period: May 2015 to April 2017. (Even though the premium payment is in installment, we are liable to pay $ 48000 on the first day of issuance of policy i.e 1 May 2015)
Kindly advice me, how to treat prepayments and sundry creditors in ledger and financial report as at 31st December 2016?
Looking for expert advice with apt justifications.