A computer company has $2,000,000 in research and development costs. Before accounting for these costs, the net income of the company is $1,600,000. What is the amount of net income or loss after these R & D costs are accounted for?
A) $400,000 loss
B) $1,600,000 net income
C) $0
D) Cannot be determined from the information provided.

Question

Quizplus · Accepted Answer

In order to calculate the net income after accounting for the research and development costs, we need to subtract these costs from the net income before accounting for them. Therefore, the formula is:

Net Income (after R&D costs) = Net Income (before R&D costs) - R&D Costs

Net Income (after R&D costs) = $1,600,000 - $2,000,000

Net Income (after R&D costs) = -$400,000

This means that the company is operating at a loss of $400,000 after accounting for the research and development costs. Therefore, the correct answer is A) $400,000 loss.

A Computer Company Has $2,000,000 in Research and Development Costs