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

The research expenditures cannot be capitalized and must be expensed in the year incurred. Therefore, the deduction for research expenditures is $175,000 in the current year. Since no benefits are realized until next year, there will be no deduction in the next year. Option A is incorrect because only the current year's expenditures can be expensed. Option B is incorrect because there is no deduction in the current year. Option D is incorrect because it includes costs that cannot be deducted in the current year.

This Year Bauer Corporation Incurs the Following Costs in Development