69. Racine started a new business in the current year. She incurred $52,000 of start-up costs. If her business started on November 23rd of the current year, what is the total expense she may deduct with respect to the start-up costs for her initial year, rounded to the nearest whole number? The maximum immediate expense amount of $5,000 phases out dollar for dollar if more than $50,000 of start-up costs are incurred. Thus, the immediate expensing is $3,000 ($5,000 - ($52,000 - $50,000)). The amortization is $544 ($49,000/180) × 2 months). AACSB: Analytic AICPA BB: Critical Thinking Blooms: Analyze Blooms: Apply Learning Objective: 02-04 Explain the rationale behind amortization; describe the four categories of amortizable intangible assets; and calculate amortization expense. Level of Difficulty: 2 Medium 70. Daschle LLC completed some research and development during June of the current year. The related costs were $60,000. If Daschle wants to capitalize and amortize the costs as quickly as possible, what is the total amortization expense Daschle may deduct during the current year? The amortization when capitalization is elected is $7,000 ($60,000/60) × 7 months). The amortization period on capitalized research and development is not less than 60 months—and 60 months is the most elected. AACSB: Analytic AICPA BB: Critical Thinking Blooms: Analyze Learning Objective: 02-04 Explain the rationale behind amortization; describe the four categories of amortizable intangible assets; and calculate amortization expense. Level of Difficulty: 1 Easy
69. Racine started a new business in the current year. She incurred $52,000 of start-up costs. If her business started on November 23rd of the current year, what is the total expense she may deduct with respect to the start-up costs for her initial year, rounded to the nearest whole number? The maximum immediate expense amount of $5,000 phases out dollar for dollar if more than $50,000 of start-up costs are incurred. Thus, the immediate expensing is $3,000 ($5,000 - ($52,000 - $50,000)). The amortization is $544 ($49,000/180) × 2 months). AACSB: Analytic AICPA BB: Critical Thinking Blooms: Analyze Blooms: Apply Learning Objective: 02-04 Explain the rationale behind amortization; describe the four categories of amortizable intangible assets; and calculate amortization expense. Level of Difficulty: 2 Medium 70. Daschle LLC completed some research and development during June of the current year. The related costs were $60,000. If Daschle wants to capitalize and amortize the costs as quickly as possible, what is the total amortization expense Daschle may deduct during the current year? The amortization when capitalization is elected is $7,000 ($60,000/60) × 7 months). The amortization period on capitalized research and development is not less than 60 months—and 60 months is the most elected. AACSB: Analytic AICPA BB: Critical Thinking Blooms: Analyze Learning Objective: 02-04 Explain the rationale behind amortization; describe the four categories of amortizable intangible assets; and calculate amortization expense. Level of Difficulty: 1 Easy
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