Question

A computer company has $3540000 in research and development costs. Before accounting for these costs, the net income of the company is $2540000. What is the amount of net income or loss before taxes after these research and development costs are accounted for?

Answer 1

Answer:

The amount of loss before taxes=$1,000,000 after accounting for research and development costs.

Explanation:

To calculate the final net income or the loss before taxes, we express this as;

Final net income/loss=Initial net income-Research and development costs

where;

Final net income/loss is the net income after accounting for research and development costs. This is unknown at the moment and needs to be calculated using the expression above

Initial net income is the net income before accounting for the research and development costs=$2,540,000

Research and development costs are expenses incurred and should be subtracted from the initial net income=$3,540,000

Replacing the values in the expression;

Final net income/loss=(2,540,000-3,540,000)=-$1,000,000

The amount of loss before taxes=$1,000,000 after accounting for research and development costs.