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Harrison Hartwell and Zenith is a successful law firm employing 26 professionals. There is an internal controversy over allocation of the $104,000 purchase cost of a highly sophisticated electronic law library. Each professional employee of the firm has been assessed $4,000 as a charge against the profit distribution account of each of the 26 members affected. In addition, it is expected to cost about $2,600 per month to update information for the library system, resulting in a monthly $100 assessment against each professional in the firm.

Required:

(a) As a new junior member of the professional legal group of 26, why might you not like the proposed electronic library cost allocation?

(b) Propose an alternate allocation method for both the initial purchase cost and the updating charge that is more equitable (fair).

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9987105

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