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What accounting adjustments would you make

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Question - Quack Ltd is a pharmaceutical company that manufactures the licenced drug, Snakeoil. Quack Ltd is listed on the Utopia Stock Exchange. It's reporting currency is Utopia Dollars (U$). During the year ended 31 December 2019, Quack Ltd made significant progress on its next generation Snakeoil drug, Snakeoil 2.0. It passed from the research phase of the development to the development stage. Assume that you are an analyst studying the financial statements of Quack Ltd for the year ended 31 December 2019. You notice that Quack Ltd has inventory of Snakeoil worth U$750,000. However, this inventory is not worth more than U$250,000 in the market. Further, Quack Ltd expensed the entire U$1,500,000 of the development expenditure for Snakeoil 2.0. Assume that the tax rate is 30%. What accounting adjustments would you make?

Reference no: EM132773576

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