The Wisconsin Corporation spends $100,000 in research and $200,000 in development during Year One. The...
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Accounting
The Wisconsin Corporation spends $100,000 in research and $200,000 in development during Year One. The company spends the same amounts in Year Two. For its internal reporting, the company has a policy whereby all research costs are expensed as incurred but all development costs are capitalized. These capitalized costs are then amortized to expense over five full years beginning with the year after the cost is incurred. a. What change is necessary to reduce the internally reported net income figure for Year One to the amount that should be shown for external reporting purposes according to U.S. GAAP? b. What change is necessary to reduce the internally reported net income figure for Year Two to the amount that should be shown for external reporting purposes according to U.S. GAAP?
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