Discussion Forum

Abstract

Question 1 Explain how these pharmaceutical companies would account for these vaccines under Generally Accepted Accounting Principles Generally Accepted Accounting Principles for pharmaceutical companies include revenue flow which arises from royalties and dividends. These companies can also account for the vaccines by following the accrual GAAP which states that the vaccines are viewed as expenses, hence debited into the expense account but credit the same amount into the accrued liabilities account. Question 2 As you can probably imagine, there is an ongoing controversy as to how R&D costs should be accounted for. Do you think that it is right that these companies account for these vaccines in these ways? Why? Discuss your point of view The research and development costs should be recorded as expenses as required by GAAP. agree that the R&D expenditure falls under the goodwill and intangible assets category. Vaccines are part of the R&D costs since they are developed after a long period of research and development (White, 2020). However, I think that pharmaceutical companies should account for vaccines as intangible assets which include patents, trademarks, goodwill, patents, and intellectual property. Pharmaceutical companies invest a lot of time and capital in making vaccines. These vaccines can be treated as patents because the manufacturing formula cannot be shared. Vaccines should be treated as patents. Generally Accepted Accounting Principles (GAAP) require patents to be treated as an asset and be included in the balance sheet. Costs associated with vaccines such as salaries and wages, pandemic planning costs, and additional staffing costs should be treated as expenses. Therefore, vaccines should be categorized as intangible assets rather than expenses. Reference White, N. M. (2020, December 15). Covid Vaccine Rollout Puts R&D Accounting Under Fresh Scrutiny. The Wall Srteet Journal. Retrieved 2022, from https://news.bloombergtax.com/financial-accounting/covid-vaccine-rollout-puts-r-d-accounting-under-fresh-scrutiny