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.

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