Listed Below Are Several Transactions That Occurred During the Year

question 44

Essay

Listed below are several transactions that occurred during the year. In each case, all the amounts were debited to an account called "R and D costs." At the end of the year the company wants this account closed out and the amounts either expensed or capitalized to an asset account called "Development costs." a. During the year $5,500,000 was paid to staff to investigate whether a drug combination was effective for reducing a specific type of cancer in mice. Evidence showed it materially reduced the effects of this cancer in the mice.
b. During the year $12,000,000 was paid to staff to investigate whether a drug combination was effective for reducing a specific type of cancer for terminally ill cancer patients. The trials were successful in a limited number of cases but the results were mixed.
c. During the year $44,000,000 was paid to staff to investigate whether a drug combination was effective in reducing a specific type of cancer. The drug was very successful in most cases. Market research shows a huge market for this drug. The Board has committed further resources to complete the development of this project and to market the drug.
d. During the year $41,000,000 was paid to staff to investigate whether a drug combination was effective in reducing a specific type of cancer. The drug combination was very successful in most cases. Market research shows huge a market for this drug combination. The company is too small and does not have adequate funds to complete the balance of the drug testing, so it is looking for a large pharmaceutical firm to take it over and complete the process.
Required:
Prepare the journal entry required for each case. Explain your proposed treatment.

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Definitions:

Calcite

A common mineral form of calcium carbonate, widely found in sedimentary, metamorphic, and igneous rocks.

Cleavage

The tendency of a mineral to break along flat, even surfaces as a result of weak bonding in certain directions in the mineral's crystal structure.

Fracture

a break or crack in rock or bone, often resulting from stress or impact.

Silicon Tetrahedron

A structural unit in silicate minerals, consisting of a silicon atom surrounded by four oxygen atoms in a tetrahedral arrangement.