Please explain work to solve the current year startup expenditure amount... Prob
ID: 2516541 • Letter: P
Question
Please explain work to solve the current year startup expenditure amount...
Problem 8-55 (LO. 7) Martha was considering starting a new business. During her preliminary investigations related to the new venture, she incurred the following expenditures: Salaries Travel Professional fees Interest on a short-term note $22,000 18,000 13,000 Martha begins the business on July 1 of the current year. a. Classify for Martha the following expenditures as "Qualifies as a startup costs" or "Does not qualify as a startup cost". Salaries Travel Professional fees Interest on a short-term note Does not qualify as a startup cost Qualifies as a startup cost Qualifies as a startup cost Qualifies as a startup cost b. If Martha elects 195 treatment, enter the startup expenditure deduction for the current year. In your calculations, round any division to 2 decimal places. Round your final answer to the nearest dollar. Current year startup expenditure equals $ 53,000 XExplanation / Answer
Answer
B.
If Martha elects 195 treatments, determine her startup expenditure deduction for the current year:
Total expenditures:
22000+18000+13000 = 53000 (Qualifies as a startup cost)
Particulars Amount Deductible Amount: $5,000-(53,000-50,000) $2000 Amortizable Amount: (53,000-2000/180) X 6 $1700 Total Start-up Expenditure Deduction $3700