Problem 7-39 (LO. 5) Blue Corporation, a manufacturing company, decided to develop a new line of merchandise. The project began in 2019. Blue had the following expenses in connection with the project: Salaries Materials. Insurance Utilities Cost of inspection of materials for quality control Promotion expenses Advertising Equipment depreciation Cost of market survey Amount of the deduction Feedback The new product will be introduced for sale beginning in April 2021. Determine the amount of the deduction for research and experimental expenditures for 2019, 2020, 2021, and 2022. If an amount is zero, enter "0". Calculate the monthly expense to the nearest dollar and use in subsequent computations. Check My Work Partially correct b. If Blue Corporation elects to amortize the research and experimental expenditures over 60 months, what will the amount of the deduction be? 2019 2020 $500,000 $600,000 90,000 70,000 8,000 11,000 6,000 8,000 7,000 6,000 11,000 18,000 20,000 14,000 2019 Amount of the deduction 0 ✓ 0 15,000 8,000 2022 2020 0 0 X c. How would your answer change if Blue Corporation incurred the expenses in 2022 and 2023 (rather than 2019 and 2020)? 2021 2023 198,297 2022 X X

Problem 7-39 (LO. 5) Blue Corporation, a manufacturing company, decided to develop a new line of merchandise. The project began in 2019. Blue had the following expenses in connection with the project: Salaries Materials. Insurance Utilities Cost of inspection of materials for quality control Promotion expenses Advertising Equipment depreciation Cost of market survey Amount of the deduction Feedback The new product will be introduced for sale beginning in April 2021. Determine the amount of the deduction for research and experimental expenditures for 2019, 2020, 2021, and 2022. If an amount is zero, enter "0". Calculate the monthly expense to the nearest dollar and use in subsequent computations. Check My Work Partially correct b. If Blue Corporation elects to amortize the research and experimental expenditures over 60 months, what will the amount of the deduction be? 2019 2020 $500,000 $600,000 90,000 70,000 8,000 11,000 6,000 8,000 7,000 6,000 11,000 18,000 20,000 14,000 2019 Amount of the deduction 0 ✓ 0 15,000 8,000 2022 2020 0 0 X c. How would your answer change if Blue Corporation incurred the expenses in 2022 and 2023 (rather than 2019 and 2020)? 2021 2023 198,297 2022 X X

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter7: Deductions And Losses: Certain Business Expenses And Losses

Section: Chapter Questions

Problem 36P

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