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Royal Manufacturing Corporation has an operating cycle of approximately 4 months (an operating cycle is the

average amount of time between the purchase of the company's raw materials and the collection of the customer's account receivable - basically the whole process from start to finish, through production to the subsequent collection from the customer). As such, Royal experiences 3 operating cycles per year. Royal had prepaid a 12-month insurance policy during the year, and there are 5 months still outstanding on the policy at the end of its fiscal year. Using the guidance in the section that you identified above:

                                                              i.     Would Royal record the remaining 5 months of prepaid insurance at year-end as a current or noncurrent asset?

                                                            ii.     Why? Provide a citation for the guidance you used and an explanation to support your answer.

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