Daschle LLC completed some research and development during June of the current year. The related costs were $72,600. If Daschle wants to capitalize and amortize the costs as quickly as possible, what is the total amortization amount Daschle may deduct during the current year?
A)$0
B)$7,865
C)$8,470
D)$14,520
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

If Daschle wants to capitalize and amortize the costs as quickly as possible, they can use the straight-line method over a 15-year period (assuming it meets the criteria for amortization). Therefore, the annual amortization expense would be $72,600 / 15 = $4,840. Since only a portion of the year has passed, the total amortization amount for the current year would be calculated based on the number of months that have passed. June is the 6th month of the year, so the calculation would be: $4,840 x (6/12) = $2,420. This is the amount that Daschle may deduct during the current year. Therefore, the correct answer is C.

Daschle LLC Completed Some Research and Development During June of the Current