Blue Corporation a manufacturing company decided to develop anew line of merch

Blue Corporation a manufacturing company decided to develop anew line of merchandise. The project began in 2008. Blue had thefollowing expenses in connection
with the project:

2012 2013

Salaries $500000 $600000

Materials 90000 70000

Insurance 8000 11000

Utilities 6000 8000

Cost of inspection of material

For qualitycontrol 7000 6000

Promotionexpenses 11000 18000

Advertising -0- 20000

Equipmentdepreciation 15000 14000

Cost of marketsurvey 8000 -0-

The new product will be introduced for sale beginning in July2010. Determine the amount of the deduction for research andexperimental expenditures for 2012
2013 and 2014 if:

a. Blue Corporation elects to expense theresearch and experimental expenditures.

b. Blue Corporation elects to amortize theresearch and experimental expenditures over 60 months.