Question

In: Accounting

25. In accounting for research and experimental expenditures incurred in 2018, all of the following alternatives...

25. In accounting for research and experimental expenditures incurred in 2018, all of the following alternatives are available with the exception of

A) expense R&E costs in the year in which a product or process becomes marketable.

B) expense R&E costs in the year paid or incurred.

C) defer and amortize R&E costs as a ratable deduction over a period of 60 months or more.

D) capitalize and write off R&E costs only when the research project is abandoned or is worthless.

26. Green Corporation purchases specialty software from a software development firm for use in its business as of January 1 of the current year at a cost of $90,000. No hardware was acquired. How much of the cost can Green deduct this year?

A) $30,000

B) $45,000

C) $60,000

D) $90,000

27. In calculating depletion of natural resources each period,

A) cost depletion must be used.

B) percentage depletion must be used.

C) the smaller of cost depletion or percentage depletion must be used.

D) the greater of cost depletion or percentage depletion must be used.

Expert Solution

25. In accounting for research and experimental expenditures incurred in 2018, all of the following alternatives are available with the exception of

A) expense R&E costs in the year in which a product or process becomes marketable.

B) expense R&E costs in the year paid or incurred.

C) defer and amortize R&E costs as a ratable deduction over a period of 60 months or more.

D) capitalize and write off R&E costs only when the research project is abandoned or is worthless.

Answer: A

In the year paid or incurred, the expenditures may be expensed, capitalized and amortized over 60 months, or capitalized, but not to wait for the product to become marketable.

26. Green Corporation purchases specialty software from a software development firm for use in its business as of January 1 of the current year at a cost of $90,000. No hardware was acquired. How much of the cost can Green deduct this year?

A) $30,000

B) $45,000

C) $60,000

D) $90,000

Answer: A

Purchased software that is not (1) acquired in connection with hardware or (2) is not a Sec. 197 intangible is amortized over 36 months. $90,000 × 12/36 = $30,000. Sec. 179 is not available because it is not off-the-shelf software.

27. In calculating depletion of natural resources each period,

A) cost depletion must be used.

B) percentage depletion must be used.

C) the smaller of cost depletion or percentage depletion must be used.

D) the greater of cost depletion or percentage depletion must be used.

Answer: D

The method that is used in any year is the one that results in the largest deduction.

ekkarill92 answered 3 months ago

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