Quisco Systems has 6.7 billion shares outstanding and a share price of $18.72. Quisco is considering developing a new networking product in house at a cost of $ 523 million.​ Alternatively, Quisco can acquire a firm that already has the technology for $ 917 million worth​ (at the current​ price) of Quisco stock. Suppose that absent the expense of the new​ technology, Quisco will have EPS of $0.79

a. Suppose Quisco develops the product in house. What impact would the development cost have on​ Quisco's EPS? Assume all costs are incurred this year and are treated as an​ R&D expense,​ Quisco's tax rate is 35% and the number of shares outstanding is unchanged.

b. Suppose Quisco does not develop the product in house but instead acquires the technology. What effect would the acquisition have on​ Quisco's EPS this​ year? (Note that acquisition expenses do not appear directly on the income statement. Assume the firm was acquired at the start of the year and has no revenues or expenses of its​ own, so that the only effect on EPS is due to the change in the number of shares​ outstanding.)

c. Which method of acquiring the technology has a smaller impact on​ earnings? Is this method​ cheaper? Explain.

Quisco Systems has 6.6 billion shares outstanding and a share price of $18.81. Quisco is considering developing a new networking product in house at a cost of $458 million.​ Alternatively, Quisco can acquire a firm that already has the technology for $948 million worth​ (at the current​ price) of Quisco stock. Suppose that absent the expense of the new​ technology, Quisco will have EPS of $0.95.

a. Suppose Quisco develops the product in house. What impact would the development cost have on​ Quisco's EPS? Assume all costs are incurred this year and are treated as an​ R&D expense,​ Quisco's tax rate is 35%​, and the number of shares outstanding is unchanged.

b. Suppose Quisco does not develop the product in house but instead acquires the technology. What effect would the acquisition have on​ Quisco's EPS this​ year? (Note that acquisition expenses do not appear directly on the income statement.

Assume the firm was acquired at the start of the year and has no revenues or expenses of its​ own, so that the only effect on EPS is due to the change in the number of shares​ outstanding.)

c. Which method of acquiring the technology has a smaller impact on​ earnings? Is this method​ cheaper? Explain.

Quisco Systems has 6.9 billion shares outstanding and a share price of $17.69. Quisco is considering developing a new networking product in house at a cost of $523 million.​ Alternatively, Quisco can acquire a firm that already has the technology for $901 million worth​ (at the current​ price) of Quisco stock. Suppose that absent the expense of the new​ technology, Quisco will have EPS of $0.99.

a. Suppose Quisco develops the product in house. What impact would the development cost have on​ Quisco's EPS? Assume all costs are incurred this year and are treated as an​ R&D expense,​ Quisco's tax rate is 35%​, and the number of shares outstanding is unchanged.

b. Suppose Quisco does not develop the product in house but instead acquires the technology. What effect would the acquisition have on​ Quisco's EPS this​ year? (Note that acquisition expenses do not appear directly on the income statement. Assume the firm was acquired at the start of the year and has no revenues or expenses of its​ own, so that the only effect on EPS is due to the change in the number of shares​ outstanding.)

c. Which method of acquiring the technology has a smaller impact on​ earnings? Is this method​ cheaper? Explain.

Quisco Systems has 6.4 billion shares outstanding and a share price of $ 17.65. Quisco is considering developing a new networking product in house at a cost of $ 528 million.​ Alternatively, Quisco can acquire a firm that already has the technology for $ 968 million worth​ (at the current​ price) of Quisco shares. Suppose that absent the expense of the new​ technology, Quisco will have EPS of $ 0.63. a. Suppose Quisco develops the product in house. What impact would the development cost have on​ Quisco's EPS? Assume all costs are incurred this year and are treated as an​ R&D expense,​ Quisco's tax rate is 30 %​, and the number of shares outstanding is unchanged. b. Suppose Quisco does not develop the product in house but instead acquires the technology. What effect would the acquisition have on​ Quisco's EPS this​ year? (Note that acquisition expenses do not appear directly on the income statement. Assume the acquired firm has no revenues or expenses of its​ own, so that the only effect on EPS is due to the change in the number of shares​ outstanding.) c. Which method of acquiring the technology has a smaller impact on​ earnings? Is this method​ cheaper? Explain

Quisco Systems has 6.4 billion shares outstanding and a share price of $ 17.73 Quisco is considering developing a new networking product in house at a cost of $493 million.​ Alternatively, Quisco can acquire a firm that already has the technology for $ 880 million worth​ (at the current​ price) of Quisco stock. Suppose that absent the expense of the new​ technology, Quisco will have EPS of $ 0.88

a. Suppose Quisco develops the product in house. What impact would the development cost have on​ Quisco's EPS? Assume all costs are incurred this year and are treated as an​ R&D expense,​ Quisco's tax rate is 35 % and the number of shares outstanding is unchanged.

b. Suppose Quisco does not develop the product in house but instead acquires the technology. What effect would the acquisition have on​ Quisco's EPS this​ year? (Note that acquisition expenses do not appear directly on the income statement. Assume the firm was acquired at the start of the year and has no revenues or expenses of its​ own, so that the only effect on EPS is due to the change in the number of shares​ outstanding.)

c. Which method of acquiring the technology has a smaller impact on​ earnings? Is this method​ cheaper? Explain.

Quisco Systems has 6.3 billion shares outstanding and a share price of $ 18.81. Quisco is considering developing a new networking product in house at a cost of $ 513 million.? Alternatively, Quisco can acquire a firm that already has the technology for $ 963 million worth? (at the current? price) of Quisco stock. Suppose that absent the expense of the new? technology, Quisco will have EPS of $ 0.96. a. Suppose Quisco develops the product in house. What impact would the development cost have on? Quisco's EPS? Assume all costs are incurred this year and are treated as an? R&D expense,? Quisco's tax rate is 35 %?, and the number of shares outstanding is unchanged. b. Suppose Quisco does not develop the product in house but instead acquires the technology. What effect would the acquisition have on? Quisco's EPS this? year? (Note that acquisition expenses do not appear directly on the income statement. Assume the firm was acquired at the start of the year and has no revenues or expenses of its? own, so that the only effect on EPS is due to the change in the number of shares? outstanding.) c. Which method of acquiring the technology has a smaller impact on? earnings? Is this method? cheaper? Explain.

Quisco Systems has 7.1 billion shares outstanding and a share price of $17.38. Quisco is considering developing a new networking product in house at a cost of $455 million.​ Alternatively, Quisco can acquire a firm that already has the technology for $913 million worth​ (at the current​ price) of Quisco stock. Suppose that absent the expense of the new​ technology, Quisco will have EPS of $0.86.

a. Suppose Quisco develops the product in house. What impact would the development cost have on​ Quisco's EPS? Assume all costs are incurred this year and are treated as an​ R&D expense,​ Quisco's tax rate is

25%​,

and the number of shares outstanding is unchanged.

b. Suppose Quisco does not develop the product in house but instead acquires the technology. What effect would the acquisition have on​ Quisco's EPS this​ year? (Note that acquisition expenses do not appear directly on the income statement.

Assume the firm was acquired at the start of the year and has no revenues or expenses of its​ own so that the only effect on EPS is due to the change in the number of shares​ outstanding.)

c. Which method of acquiring the technology has a smaller impact on​ earnings? Is this method​ cheaper? Explain.

Quisco Systems has 6.1 billion shares outstanding and a share price of $ 18.02. Quisco is considering developing a new networking product in house at a cost of $ 500 million.​ Alternatively, Quisco can acquire a firm that already has the technology for $ 920 million worth​ (at the current​ price) of Quisco stock. Suppose that absent the expense of the new​ technology, Quisco will have EPS of $ 0.78.

a. Suppose Quisco develops the product in house. What impact would the development cost have on​ Quisco's EPS? Assume all costs are incurred this year and are treated as an​ R&D expense,​ Quisco's tax rate is 35 %​, and the number of shares outstanding is unchanged.

b. Suppose Quisco does not develop the product in house but instead acquires the technology. What effect would the acquisition have on​ Quisco's EPS this​ year? (Note that acquisition expenses do not appear directly on the income statement. Assume the firm was acquired at the start of the year and has no revenues or expenses of its​ own, so that the only effect on EPS is due to the change in the number of shares​ outstanding.)

c. Which method of acquiring the technology has a smaller impact on​ earnings? Is this method​ cheaper? Explain.

Quisco Systems has 6.66.6 billion shares outstanding and a share price of $ 17.41 Quisco is considering developing a new networking product in house at a cost of $ 467

million.​ Alternatively, Quisco can acquire a firm that already has the technology for $ 939

million worth​ (at the current​ price) of Quisco stock. Suppose that absent the expense of the new​ technology, Quisco will have EPS of $ 0.82

a. Suppose Quisco develops the product in house. What impact would the development cost have on​ Quisco's EPS? Assume all costs are incurred this year and are treated as an​ R&D expense,​ Quisco's tax rate is 35% and the number of shares outstanding is unchanged.

b. Suppose Quisco does not develop the product in house but instead acquires the technology. What effect would the acquisition have on​ Quisco's EPS this​ year? (Note that acquisition expenses do not appear directly on the income statement.

Assume the firm was acquired at the start of the year and has no revenues or expenses of its​ own, so that the only effect on EPS is due to the change in the number of shares​ outstanding.)

c. Which method of acquiring the technology has a smaller impact on​ earnings? Is this method​ cheaper? Explain.

Problem 6-1B Inventory ownership—perpetual LO1
On November 30, 2020, York + Robin Shoes (Y+R) performed the annual inventory count and determined the

year-end ending inventory value to be $49,222. It is now December 3, 2020, and you have been asked to double-
check the inventory listing. Y+R uses a perpetual inventory system. Note: Only relevant items are shown on

the inventory listing.

York + Robin Shoes
Inventory Listing
Year-Ended November 30, 2020

#
Inventory
Number Inventory Description Quantity (units) Unit Cost ($) Total Value ($)
1 A20 Men’s brown dress shoes 74 $50 $ 3,700
2 B30 Women’s black boots 50 30 1,500
. . . . . .
Total Inventory $49,222

CHAPTER 6 Inventory Costing and Valuation

456
The following situations have been brought to your attention:
a. On November 28, 2020, Y+R received a customer order for men’s sneakers (Item # D50) with a sale price
of $1,000 and cost of $600, FOB shipping. The order was shipped on November 30, 2020. Y+R did not
include this inventory.
b. On December 2, 2021, Y+R received a shipment of $1,500 women’s black boots (Item # B30). The inventory
was purchased November 22, 2020, FOB destination from Global Threads. This inventory was included in
Y+R’s inventory count and inventory listing.
c. Women’s sandals (Item # C40) were purchased and shipped from International Sole Co. on November 30,
2020 for $2,300, FOB shipping. The shipment arrived December 5, 2020 and the appropriate party paid for
the shipping charges of $230. Additional costs were $161 for import duties and $86 for insurance during
shipment.
d. On November 30, 2020, Y+R shipped women’s flip flops (Item #E60) to a customer for $2,520, FOB
destination. The inventory cost $1,800 and the customer received the goods on December 3, 2020. Y+R has
not included this inventory.
e. Y+R had been holding $3,700 of men’s brown dress shoes (Item #A20) on consignment for designer Blue
Co. as at November 30, 2020. This inventory was included in Y+R’s inventory count and inventory listing.
Required
1. In situations (a) to (e), determine whether each of the following should be included or excluded in
inventory as at November 30, 2020 and explain why. If the inventory should be included, determine
the inventory cost.

2. Determine the correct ending inventory value at November 30, 2020. Starting with the unadjusted inven-
tory value of $49,222, add or subtract any errors based on your analysis in Part 1. Assume all items that are

not shown in the inventory listing or discussed in situations (a) to (e) are recorded correctly.