2. A newly created, US-based pharmaceutical firm, Vortex, has the market strateg

Question

2. A newly created, US-based pharmaceutical firm, Vortex, has the market strategy of creating cost-effective generic medications. They spent $75 million in salaries and grants for pharmaceutical researchers to produce potential patents for new generic drugs. Furthermore, once their product line was selected, they invested $625 million in building a production and quality assurance lab. Moork, a Swedish peer firm, uses IFRS to prepare their financial statements.

Make the adjusting entry or entries needed to be able to directly compare Vortex to Moork.

Explanation / Answer

Journal

($ in million)

S.No. Account Name Debit Credit 1. Research expense $75 Income statement $75 (To record salaries expense spent in research phase of new generic drugs) 2. Laboratory $625 Cash $625 (To record building of a production and quality assurance lab)

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