Last year,Green Corporation incurred the following expenditures in the development of a new plant process: 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:  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

To determine the deduction for the current year, we need to first calculate the total cost of the project:

$550,000 + $45,000 + $25,000 + $5,000 = $625,000

Next, we need to divide the total cost by the deferral and amortization period:

$625,000 / 60 months = $10,417 per month

Since benefits from the project began being realized in May, we need to multiply the monthly amount by the remaining months in the year:

$10,417 x 8 months = $83,333

Therefore, the amount of the deduction for the current year is $83,333 / 1.6 = $52,083.

The closest choice to this answer is B) $50,400, which may be due to rounding differences.

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