Last year,Green Corporation incurred the following expenditures in the development of a new plant process:
Salaries
$250,000
Materials
90,000
Utilities
20,000
Quality control testing costs
40,000
Management study costs
5,000
Depreciation of equipment
18,000

During the current year,benefits from the project began being realized in May.If Green Corporation elects a 60 month deferral and amortization period,determine the amount of the deduction for the current year.

Question

Last year,Green Corporation incurred the following expenditures in the development of a new plant process:
Salaries
$250,000
Materials
90,000
Utilities
20,000
Quality control testing costs
40,000
Management study costs
5,000
Depreciation of equipment
18,000
​
During the current year,benefits from the project began being realized in May.If Green Corporation elects a 60 month deferral and amortization period,determine the amount of the deduction for the current year.

Quizplus · Accepted Answer

The total amount of expenditures incurred in the development of the new plant process is $423,000 ($250,000 + $90,000 + $20,000 + $40,000 + $5,000 + $18,000).
Since benefits began being realized in May, the deferral and amortization period would be 60 - 8 = 52 months left in the current year.
The deduction for the current year would be: 
($423,000 / 60) * (52/12) = $50,400. 
Therefore, the correct answer is B.

Last Year,Green Corporation Incurred the Following Expenditures in the Development