Question

A company incurred the follow costs related to research and development for the current year: technology development (salaries and supplies) $ 330,000 engineering work performed by another company 160,000 purchase of equipment 760,000 testing new models 70,000 legal fees for patent application 40,000 the equipment will be used in other projects. depreciation in the current year is $100,000. for what amount should the company report research and development expense?

Answer 1

The company should report research and development expense as $1,160,000.

Step-by-step explanation:

In order to determine the amount that the company should report as research and development (R&D) expense, we need to identify the relevant costs. The costs related to R&D include technology development (salaries and supplies) of $330,000, engineering work performed by another company of $160,000, purchase of equipment of $760,000, testing new models of $70,000, and legal fees for patent application of $40,000.

However, the depreciation of the equipment in the current year of $100,000 should be subtracted from the total to get the net R&D expense.

The company should report research and development expense as follows: $330,000 + $160,000 + $760,000 + $70,000 + $40,000 - $100,000 = $1,160,000.