Question 2. (TCO C) It has been argued on the grounds of
conservatism that all intangible assets should be written off
immediately after acquisition. Discuss the accounting arguments
against this treatment.
Question 3. (TCO D) Edwards Co. includes one coupon in each bag
of dog food it sells. In return for four coupons, customers receive a
dog toy that the company purchases for $1.20 each. Edward’s
experience indicates that 60% of the coupons will be redeemed.
During 2010, 100,000 bags of dog food were sold, 12,000 toys were
purchased, and 40,000 coupons were redeemed. During 2011,
120,000 bags of dog food were sold, 16,000 toys were purchased, and
60,000 coupons were redeemed.
Instructions: