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pucegnu345Lv1
28 Sep 2019
Financial and Managerial Accounting Text 15th Edition Jan WilliamsChapter 21
Case 21.2 - Critical Thinking Cases - Page 957
McFriendly Software recently developed new spreadsheet software,Easy-Calc, which it intends to market by mail through ads incomputer magazines. Just prior to introducing Easy-Calc, McFriendlyreceives an unexpected offer from Jupiter Computer to buy allrights to the software for $10 million cash.
Instructions
A. Is the $10 million offer "relevant" financial information?
B. Describe McFriendly's opportunity cost if it (1) acceptsJupiter's offer and (2) turns down the offer and markets Easy-Calcitself. Would these opporunity costs be recorded in McFriendly'saccounting records? If so, explain the journal entry to recordthese costs.
C. Briefly describe the extent to which the dollar amounts of thetwo opportunity costs described in part b are known to managementat the time the decision is made to accept or reject Jupiter'soffer.
D. Might there be any other opportuntiy costs to consider at thetime of the making this decision? If so, explain briefly.
Financial and Managerial Accounting Text 15th Edition Jan WilliamsChapter 21
Case 21.2 - Critical Thinking Cases - Page 957
McFriendly Software recently developed new spreadsheet software,Easy-Calc, which it intends to market by mail through ads incomputer magazines. Just prior to introducing Easy-Calc, McFriendlyreceives an unexpected offer from Jupiter Computer to buy allrights to the software for $10 million cash.
Instructions
A. Is the $10 million offer "relevant" financial information?
B. Describe McFriendly's opportunity cost if it (1) acceptsJupiter's offer and (2) turns down the offer and markets Easy-Calcitself. Would these opporunity costs be recorded in McFriendly'saccounting records? If so, explain the journal entry to recordthese costs.
C. Briefly describe the extent to which the dollar amounts of thetwo opportunity costs described in part b are known to managementat the time the decision is made to accept or reject Jupiter'soffer.
D. Might there be any other opportuntiy costs to consider at thetime of the making this decision? If so, explain briefly.
Case 21.2 - Critical Thinking Cases - Page 957
McFriendly Software recently developed new spreadsheet software,Easy-Calc, which it intends to market by mail through ads incomputer magazines. Just prior to introducing Easy-Calc, McFriendlyreceives an unexpected offer from Jupiter Computer to buy allrights to the software for $10 million cash.
Instructions
A. Is the $10 million offer "relevant" financial information?
B. Describe McFriendly's opportunity cost if it (1) acceptsJupiter's offer and (2) turns down the offer and markets Easy-Calcitself. Would these opporunity costs be recorded in McFriendly'saccounting records? If so, explain the journal entry to recordthese costs.
C. Briefly describe the extent to which the dollar amounts of thetwo opportunity costs described in part b are known to managementat the time the decision is made to accept or reject Jupiter'soffer.
D. Might there be any other opportuntiy costs to consider at thetime of the making this decision? If so, explain briefly.
Reid WolffLv2
28 Sep 2019