Question

Wren Corporation incurs $54,000 startup expenditures. How much of this expenditure can be expensed immediately? A....

Wren Corporation incurs $54,000 startup expenditures. How much of this expenditure can be expensed immediately?

A. $4,000

B. $50,000

C. $1,000

D. $54,000

Business   Accounting   
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Answer #1

IRS allows us to deduct $5000 of start up expenses if total start up expenditure is $50000 or less and balance is to be amortized with in 180 months . In case total startup caost exceed $ 50000 then the amount will be reduced by the amount it has increased by 50000. In case of Wren Corporation   startup cost is 54000 then deduction amount would be$ (5000-(54000-50000)=$1000.  and balance 53000 would be amortized as $ 53000/180 =$294 per month

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