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
A)$10,000 this year and $175,000 next year.
B)$175,000 next year.
C)$175,000 this year.
D)$215,000 this year.

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
A)$10,000 this year and $175,000 next year. 
B)$175,000 next year. 
C)$175,000 this year. 
D)$215,000 this year.

Quizplus · Accepted Answer

According to the question, there are no benefits realized from the research expenditures until next year. Therefore, if Bauer Corporation elects to expense the research expenditures, they can take a deduction of $175,000 this year. Option A is incorrect because only the current year's expenses can be deducted. Option B is incorrect because the question states that no benefits are realized until next year, so the deduction cannot be taken until next year. Option D is incorrect because it adds the current year's and next year's expenses, which is not correct.

This Year Bauer Corporation Incurs the Following Costs in Development