This year Bauer Corporation incurs the following costs in development of new products: No benefits are realized from the research expenditures until next year. If Bauer Corporation elects to expense the research expenditures, the deduction is

Question

This year Bauer Corporation incurs the following costs in development of new products:  No benefits are realized from the research expenditures until next year. If Bauer Corporation elects to expense the research expenditures, the deduction is

Quizplus · Accepted Answer

Research and development costs are expensed in the year they are incurred. Therefore, Bauer Corporation can deduct the full $175,000 research expenditure in the current year. Benefit from the research will be realized in the next year.

This Year Bauer Corporation Incurs the Following Costs in Development