Price Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2019, the company expends $325,000 on a research project, but by the end of 2019 it is impossible to determine whether any benefit will be derived from it. What account should be charged for the $325,000, and how should it be shown in the financial statements? Additional engineering and consulting costs incurred in 2021 required to advance the design of a product to the manufacturing stage total $60,000. These costs enhance the design of the product considerably. Discuss the proper accounting treatment for this cost.
Price Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2019, the company expends $325,000 on a research project, but by the end of 2019 it is impossible to determine whether any benefit will be derived from it. What account should be charged for the $325,000, and how should it be shown in the financial statements? Additional engineering and consulting costs incurred in 2021 required to advance the design of a product to the manufacturing stage total $60,000. These costs enhance the design of the product considerably. Discuss the proper accounting treatment for this cost.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 6P
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Price Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2019, the company expends $325,000 on a research project, but by the end of 2019 it is impossible to determine whether any benefit will be derived from it.
What account should be charged for the $325,000, and how should it be shown in the financial statements?
Additional engineering and consulting costs incurred in 2021 required to advance the design of a product to the manufacturing stage total $60,000. These costs enhance the design of the product considerably. Discuss the proper accounting treatment for this cost.
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