Question 14 Lincoln Company has an accounting policy for internal reporting purposes whereby the costs of any research and development projects that are over 70 percent likely to succeed are capitalized and then depreciated over a five-year period with a full year of depreciation in the year of capitalization. In the current year, $400,000 was spent on Project One, and it was 55 percent likely to succeed, $600,000 was spent on Project Two, and it was 65 percent likely to succeed, and $900,000 was spent on Project Three, and it was 75 percent likely to succeed. In converting the internal financial statements to external financial statements, by how much will net income for the current year have to be reduced? O $900,000 Ⓒ $720,000 O $180,000 O $380,000 1/1

Question 14 Lincoln Company has an accounting policy for internal reporting purposes whereby the costs of any research and development projects that are over 70 percent likely to succeed are capitalized and then depreciated over a five-year period with a full year of depreciation in the year of capitalization. In the current year, $400,000 was spent on Project One, and it was 55 percent likely to succeed, $600,000 was spent on Project Two, and it was 65 percent likely to succeed, and $900,000 was spent on Project Three, and it was 75 percent likely to succeed. In converting the internal financial statements to external financial statements, by how much will net income for the current year have to be reduced? O $900,000 Ⓒ $720,000 O $180,000 O $380,000 1/1

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter11: The Cost Of Capital

Section: Chapter Questions

Problem 18PROB

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