The Wagner Company made the following expenditures for research and development early in 2014: $80,000 for materials, $100,000 for contract services, $80,000 for employee salaries, and $800,000 for a building with an expected life of 20 years to be used for current and future research projects. Wagner uses straight-line depreciation. The company allocated $20,000 in overhead to research and development. What is Wagners' research and development expense for 2014?

Question

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The research and development expense for 2014 is $320,000. This includes the $80,000 for materials, $100,000 for contract services, $80,000 for employee salaries, and $20,000 for overhead. The $800,000 for the building is capitalized and depreciated over its 20-year life.

The Wagner Company Made the Following Expenditures for Research and Development