Organization costs are expensed immediately, even though they conceptually benefit the corporation over its entire life.

Question

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Organization costs, such as legal and incorporation fees, are considered startup costs and are expensed immediately under the generally accepted accounting principles (GAAP). Although they may provide long-term benefits to the corporation, they do not provide any future economic benefits beyond the current period and, therefore, cannot be capitalized as an asset.

Organization Costs Are Expensed Immediately, Even Though They Conceptually Benefit