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 Ubilities Cost of inspection of materials for quality control Promotion expenses Advertising Equipment depreciation Cost of market survey 2019 2020 $500,000 $600,000 90,000 70,000 8,000 6,000 7,000 11,000 0 15,000 8,000 11,000 8,000 6,000 18,000 20,000 14,000
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 Ubilities Cost of inspection of materials for quality control Promotion expenses Advertising Equipment depreciation Cost of market survey 2019 2020 $500,000 $600,000 90,000 70,000 8,000 6,000 7,000 11,000 0 15,000 8,000 11,000 8,000 6,000 18,000 20,000 14,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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D3.
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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 i
Cost of market survey
Amount of the deduction
Feedback
The new product will be introduced for sale beginning in April 2021. Determine the amount of the deduction for research and experimental
expenditures for 2019, 2020, 2021, and 2022.
Check My Work
If an amount is zero, enter "0". Calculate the monthly expense to the nearest dollaLand u
use in subsequent computations.
a. If Blue Corporation elects to expense the research and experimental expenditures, what will the amount of the deduction be?
Amount of the deduction
Feedback
Check
2019
619,000 ✓
Amount of the deduction -
2019
2020
$500,000 $600,000
90,000 70,000
11,000
8,000
5,000
18,000
20,000
14,000
0
8,000
6,000
7,000
11,000
2019
0
0
15,000
8,000
b. If Blue Corporation elects to amortize the research and experimental expenditures over 60 months, what will the amount of the
deduction be?
2020
703,000
2021 and 2022
2020
2022
0 ✓
0
2023
2021
198,297 ✓
c. How would your answer change if Blue Corporation incurred the expenses in 2022 and 2023 (rather than 2019 and 2020)?
2022
264,396 ✔
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