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:
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.
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