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 amount of the deduction for the current year, we need to use the following formula:

Deduction for the current year = (Total project cost / Deferral and amortization period) x (Number of months elapsed in the current year / 12)

Total project cost = $280,000
Deferral and amortization period = 60 months

Number of months elapsed in the current year = May to December = 8 months

Deduction for the current year = ($280,000 / 60) x (8 / 12) = $46,667

Therefore, the correct answer is B) $50,400.

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