Accounting的题目,
QuestionTwo
Medco,apharmaceuticalcompany,planstospend$90milliononresearchanddevelopment(R&D)at
thebeginningofeachofthenextseveralyearstodevelopnewdrugs.AsaresultoftheR&D
expenditureforagivenyear,itexpectsnetincome(notcountingR&Dexpense)toincreaseby$36
millionayearforthreeyears,includingtheyearoftheexpenditureitself.Medcohasotherincomeof
$30millionperyear.ThefinancialcontrollerofMedcoiscuriousabouttheeffectonthefinancial
statementsoffollowingoneoftwoaccountingpolicieswithrespecttoR&Dexpenditures:
(1)ExpensingtheR&Dcostsintheyearofexpenditure
(2)CapitalizingtheR&Dcostsandamortizingthemoverthreeyears,includingtheyearof
expenditureitself
Assumethatthecompanydoesspend$90millionatthebeginningofeachoffouryearsandthatthe
plannedincreaseinincomeoccurs.Ignoreallincometaxeffects.
Required:
a.Prepareafour-yearsummaryofnetincome,assumingthatMedcofollowspolicy(1)and
expensestheR&Dcostsasincurred.
b.Prepareafour-yearsummaryofnetincome,assumingthatMedcofollowspolicy(2)and
capitalizestheR&Dcosts,thenamortizesthemoverthreeyears.Showtheeffectonthe
balancesheetovereachofthesefouryearsunderthispolicy.
c.Inwhatsenseispolicy(1)aconservativepolicy?
d.AscertaintheeffectonnetincomeandonthebalancesheetifMedcocontinuestospend
$90millioneachyearandtheincomeeffectscontinueasinthefirstfouryears.Inyour
analysis,identifythefutureimpactoftheaccountingpolicychoiceonkeyfinancial
statementratiosincludingreturnonassetsandreturnonequity.
能做多少都行啊