Blue Corporation, a manufacturing company, decided to develop a new line of merchandise. The project began in 2019. Blue had the following expenses in connection with the project: Salaries Materials Insurance Utilities Cost of inspection of materials for quality control Promotion expenses Advertising Equipment depreciation Cost of market survey Amount of the deduction 2019 Amount of the deduction $500,000 $600,000 70,000 11,000 90,000 8,000 6,000 Amount of the deduction 7,000 11,000 0 15,000 8,000 2020 8,000 2019 6,000 18,000 The new product will be introduced for sale beginning in July 2021. Determine the amount of the deduction for research and experimental expenditures for 2019, 2020, 2021, and 2022. 20,000 If an amount is zero, enter "0". Calculate the monthly expense to the nearest dollar and use in subsequent computations. a. If Blue Corporation elects to expense the research and experimental expenditures, what will the amount of the deduction be? 14,000 0 2020 b. If Blue Corporation elects to amortize the research and experimental expenditures over 60 months, what will the amount of the deduction be? 2019 2021 and 2022 2022 2020 c. How would your answer change if Blue Corporation incurred the expenses in 2022 and 2023 (rather than 2019 and 2020)? 2021 2023 2022
Blue Corporation, a manufacturing company, decided to develop a new line of merchandise. The project began in 2019. Blue had the following expenses in connection with the project: Salaries Materials Insurance Utilities Cost of inspection of materials for quality control Promotion expenses Advertising Equipment depreciation Cost of market survey Amount of the deduction 2019 Amount of the deduction $500,000 $600,000 70,000 11,000 90,000 8,000 6,000 Amount of the deduction 7,000 11,000 0 15,000 8,000 2020 8,000 2019 6,000 18,000 The new product will be introduced for sale beginning in July 2021. Determine the amount of the deduction for research and experimental expenditures for 2019, 2020, 2021, and 2022. 20,000 If an amount is zero, enter "0". Calculate the monthly expense to the nearest dollar and use in subsequent computations. a. If Blue Corporation elects to expense the research and experimental expenditures, what will the amount of the deduction be? 14,000 0 2020 b. If Blue Corporation elects to amortize the research and experimental expenditures over 60 months, what will the amount of the deduction be? 2019 2021 and 2022 2022 2020 c. How would your answer change if Blue Corporation incurred the expenses in 2022 and 2023 (rather than 2019 and 2020)? 2021 2023 2022
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Blue Corporation, a manufacturing company, decided to develop a new line of merchandise. The project began in 2019. Blue had the
following expenses in connection with the project:
Salaries
Materials
Insurance
Utilities
Cost of inspection of materials for quality
control
Promotion expenses
Advertising
Equipment depreciation
Cost of market survey
Amount of the deduction
2019
Amount of the deduction
$500,000 $600,000
70,000
11,000
90,000
8,000
6,000
Amount of the deduction
7,000
11,000
0
15,000
8,000
2020
8,000
2019
6,000
18,000
The new product will be introduced for sale beginning in July 2021. Determine the amount of the deduction for research and
experimental expenditures for 2019, 2020, 2021, and 2022.
20,000
If an amount is zero, enter "0". Calculate the monthly expense to the nearest dollar and use in subsequent computations.
a. If Blue Corporation elects to expense the research and experimental expenditures, what will the amount of the deduction be?
14,000
0
2020
b. If Blue Corporation elects to amortize the research and experimental expenditures over 60 months, what will the amount of the
deduction be?
2019
2021 and 2022
2022
2020
c. How would your answer change if Blue Corporation incurred the expenses in 2022 and 2023 (rather than 2019 and 2020)?
2021
2023
2022
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