Cost Accounting (15th Edition)

Published by Prentice Hall
ISBN 10: 0133428702
ISBN 13: 978-0-13342-870-4

Chapter 1 - The Manager and Management Accounting - Assignment Material - Problems - Page 26: 1-33(1)

Answer

Acceptable Actions - Sell off rights to drug Martek; This actions does not involve any unethical practices, and can be a strategic decision to address the recent budget shortfall Unacceptable Actions - Stop all research and development efforts on the drug Vyacon until after year-end;It could severely affects the company competitive advantage and potentially harm patients who could benefit from the drug, Capitalize some of the company's R&D expenditures; It's against Generally Accepted Accounting Principles (GAAP) as it concerns with manipulation of income statement.

Work Step by Step

Acceptable Actions - Sell off rights to drug Martek; This actions does not involve any unethical practices, and can be a strategic decision to address the recent budget shortfall Unacceptable Actions - Stop all research and development efforts on the drug Vyacon until after year-end;It could severely affects the company competitive advantage and potentially harm patients who could benefit from the drug, Capitalize some of the company's R&D expenditures; It's against Generally Accepted Accounting Principles (GAAP) as it concerns with manipulation of income statement.
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