Juliette formed a new business to sell sporting goods this year. The business opened its doors to customers on June 1. Determine the number of start-up costs Juliette can immediately expense (not including amortization) this year in the following alternative scenarios:1) She incurred start-up costs of $3,000.2) She incurred start-up costs of $42,250.3) She incurred start-up costs of $51,850.

Question

04-07-2020
Business

contestada

Juliette formed a new business to sell sporting goods this year. The business opened its doors to customers on June 1. Determine the number of start-up costs Juliette can immediately expense (not including amortization) this year in the following alternative scenarios:1) She incurred start-up costs of $3,000.2) She incurred start-up costs of $42,250.3) She incurred start-up costs of $51,850.

Respuesta :

Otras preguntas

Based on your understanding of citizenship, create a new definition for this term in contemporary american society. what is an american citizen, in your opinion

Read the excerpt from "Speech to National Council of Negro Women” by Condoleezza Rice. My grandfather understood something, and so did my grandmother and my mot

PLS ANSWER ASAP- THIS IS A 7th GRADE QUESTION AND IF UR ANSWER IS THE FIRST AND CORRECT, I WILL MARK BRAINLIEST

Warm Shelters.org received a donation of $32,000 to buy beds and dressers for its new dormitories. Each bed will cost $320.00 and each dresser will be $75.00 ea

What percentage of the 22,215 auto fatalities in 2019 were vehicle passengers not wearing seat belts?.

genotype is determined by the makeup of alles orvthe form of a gene that produced different effects

A car of mass 750 kg accelerates away from traffic lights. At the end of the first 100 m it has reached a speed of 12 m/s. During this time, its engine provides

Large eggs weigh 1/1/2 pounds per dozen. Dawn bought eight large eggs. How much did the eggs weigh

The Ramayana is a classic story from ancient India. In the story, the hero is helped by a friend and he helps the friend in return. What does this reveal about

The figure below shows a square ABCD and an equilateral triangle DPC: ABCD is a square. P is a point inside the square. Straight lines join points A and P, B an

anthougo anthougo · Answer 1 · 2020-07-05T13:38:30+02:00

Answer:

Juliette Sporting Goods

Determination of the number of Start-up Costs to Expense Under U.S. GAAP and IRS Reporting:

1) She incurred start-up costs of $3,000.

Juliette can expense $3,000 this first year under US GAAP and for IRS tax purposes.

2) She incurred start-up costs of $42,250.

i) Under U.S. GAAP reporting, Juliette can expense the $42,250 this year.

ii) Under IRS reporting, Juliette can expense $5,000 this first year or elect to expense $2,250 the first year. The balance of $37,250 (or $40,000) will be amortized.

3) She incurred start-up costs of $51,850.

i) Under U.S. GAAP reporting, Juliette can expense the $51,850 this year.

ii) Under IRS reporting, Juliette can expense $1,850 this first year and the balance of $50,000 would be amortized.

Explanation:

a) For those companies reporting under US GAAP, Financial Accounting Standards Codification 720 states that start up/organization costs should be expensed as incurred.

b) Start-up cost is treated differently for tax purposes: The IRS allows a deduction of $5,000 in the first year you are in business, provided it is $50,000 or less. This deduction must be made in the first year of active engagement in the business. The balance over $5,000 must be capitalized and amortized over the applicable number of years.

If start-up cost is more than $50,000 but less than $55,000,there is a phase out of the $5,000 deduction. For example, if you spent $51,850, your deduction in the first year would be $1,850 and then the balance of $50,000 would have to be capitalized and amortized.

If startup costs is greater than $55,000, there is no immediate deduction of $5,000 in the first year of active business. All the costs would be capitalized and then amortized each year as an expense.

The summary is that for tax reporting, the IRS does not allow a start-up cost deduction in excess of $5,000 each year. And the limit for this amortization of start-up costs is 15 years or 180 months.