As prepaid rent is used, the asset becomes a liability.
Explanation:
The future sacrifice of any economic benefit, which is the result of any obliged legal contract is named as a liability. It is calculated by subtracting the assets from the equity that is,
[tex]\text{Liabilities = Equity - Assets}[/tex]
Initially, if the rent has been prepaid for the next 8 months, then till that particular date it is considered as an asset. And at once it gets used up after the specified date, the rent becomes a liability.
Assets are any non-tangible or tangible items owned by an individual or a business entity.
