Why would the vice president of a company who receives an annual bonus based on profitability of the company want you to create a income statement that classified startup costs, research costs and development costs as a product costs?
What are the ethical considerations of reporting startup costs as product costs?
As a corporate controller, how would you have explained to the vice president that you could not close the year end finanial accounting reports with this income statement.
The vice president is likely below the threshold above which he or she will receive an annual bonus this period and is attempting to bury expenses hoping for a larger bonus next period. For example, expensing all startup costs and R&D expenses during this year will make expenses much lower in subsequent periods increasing the likelihood of ...
The solution details why a corporate president might want startup and R&D costs expensed as product costs and the ethical and professional considerations pertinent to the situation.