Accounting Dictionary

Prorate

To prorate means to allocate or give partial credit.

John paid $100 for a car battery guaranteed for 5 years, costing approximately $20 per year ($100/5). The battery broke after 3 years. When John went in to buy a new battery, they prorated the cost of the new battery. Since John only got $60 (3 x 20) use out of the old battery, they deducted $40 from the cost of the new battery.

Sign Up to Learn More!

Join our mailing list today to get notified of new discount offers, course updates, Roger CPA Review news, and more!

Scroll to Top