Ross Neale is the divisional accountant for the Research and Development division of Critical Pharmaceuticals PLC. He
Question:
Ross suggests that there are several strategies they could employ, namely:
(a) Several of the subcontractors have us as their largest customer and so we could ask them to describe the services in the fourth quarter, which are essentially development cost, as research costs.
(b) We could ask them to charge us in advance for research work that will be required in the first quarter of next year without mentioning that it is an advance in documentation. That would be good for them as it would improve their cash flow and it would guarantee that they would get the work next year.
(c) We could ask some of the subcontractors on development projects to charge us in the first quarter of next year and we could hold out to them that we would give them some better-priced projects next year to compensate them for the interest incurred as a result of the delayed payment.
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Related Book For
Financial Accounting and Reporting
ISBN: 978-1292080505
17th edition
Authors: Barry Elliott, Jamie Elliott
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