Discuss the validity and implications

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ABC, Inc. has just entered into the business of selling antique cars. The company management decided to lease the premises for the business instead of buying the office premises. They ended up paying an advance rent of $5 million dollars for the initial period of 5 years. The entire amount was recorded as an asset in the form of prepaid expense. When questioned by the auditors, the CFO of ABC, Inc. mentioned "An asset is just an expense waiting to happen." Discuss the validity and implications of this statement.

Reference no: EM13133457

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