Reference no: EM131115334
1. Accounting for Research and Development Costs Cuevas Co. is in the process of developing a revolutionary new product. A new division of the company was formed to develop, manufacture, and market this new product. As of year-end (December 31, 2010), the new product has not been manufactured for resale. However, a prototype unit was built and is in operation. Throughout 2010 the new division incurred certain costs. These costs include design and engineering studies, prototype manufacturing costs, administrative expenses (including salaries of administrative personnel), and market research costs. In addition, approximately $900,000 in equipment (with an estimated useful life of 10 years) was purchased for use in developing and manufacturing the new product. Approximately $315,000 of this equipment was built specifically for the design development of the new product. The remaining $585,000 of equipment was used to manufacture the pre-production prototype and will be used to manufacture the new product once it is in commercial production.
(a) How are "research" and "development" defined in the authoritative literature (GAAP)?
(b) Briefly indicate the practical and conceptual reasons for the conclusion reached by the FinancialAccounting Standards Board on accounting and reporting practices for research and development costs
(c) In accordance with GAAP, how the various costs of Cuevas described above should be recorded on the financial statements for the year ended December 31, 2010?(AICPA adapted)
|
Assume that your friend greg jonas who is a music major
: Assume that your friend Greg Jonas, who is a music major, asks you to define and discuss the nature of a liability.
|
|
What is the implied yen dollor exchange rate at maturity?
: A five-year, 4 percent Euro yen bond sells at par. A comparable risk five-year, 5.5 percent yen/dollar dual-currency bond pays $833.44 at maturity per¥100,000 of face value. It sells for ¥110,000. What is the implied ¥/$ exchange rate at maturity?
|
|
What are the ethical issues involved
: Who are the stakeholders in this situation? What are the ethical issues involved?
|
|
Will the investor be better or worse off at maturity
: Consider 8.5 percent Swiss franc/U.S. dollar dual-currency bonds that pay $666.67 at maturity per SF 1,000 of par value. It sells at par. What is the implicit SF/$ exchange rate at maturity? Will the investor be better or worse off at maturity if the..
|
|
Accounting for research and development costs cuevas
: In accordance with GAAP, how the various costs of Cuevas described above should be recorded on the financial statements for the year ended December 31, 2010?(AICPA adapted)
|
|
Present value of this stream of income is positive
: Suppose you are deciding whether to install rooftop solar panels on your house. The immediate installation cost is $1100. A year from now, you will start collecting annual benefits equal to $300 per year. After collecting these benefits for 4 years, ..
|
|
Linear programming problem-decision variables
: What is a shadow price and how can business managers use it to make decisions? Formulate and write out the following linear programming problem. You do not need to solve this just specify the objective function, decision variables, and relevant const..
|
|
What is the amount of the first coupon payment
: Your firm has just issued five-year floating-rate notes indexed to six-month U.S. dollar LIBOR plus 1/4 percent. What is the amount of the first coupon payment your firm will pay per U.S. $1,000 of face value, if six-month LIBOR is currently 7.2 perc..
|
|
What will be the company gross revenue in this venture
: A monopoly's demand curve is P = 200 – 3Q and its MC = $15. How many customers should this company serve? What is the price paid by each customer? What will be the company’s gross revenue in this venture?
|