Determine the amount of the deduction for research

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Reference no: EM131947154

Question: Blue Corporation, a manufacturing company, decided to develop a new line of merchandise. The project began in 2015. Blue had the following expenses in connection with the project:

2015 2016

Salaries 500,000 600,000

Materials 90,000 70,000

Insurance 8,000 11,000

Utilities 6,000 8,000

Cost of inspection of materials for quality control 7,000 6,000

Promotion expenses 11,000 18,000

Advertising 0 20,000

Equipment depreciation 15,000 14,000

Cost of market survey 8,000 0

The new product will be introduced for sale beginning in July 2017. Determine the amount of the deduction for research and experimental expenditures for 2015, 2016, and 2017 if:

a. Blue Corporation elects to expense the research and experimental expenditures.

b. Blue Corporation elects to amortize the research and experimental expenditures over 60 months.

Reference no: EM131947154

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