Question

Sheridan Inc. incurred the following costs during the year ended December 31, 2021: Laboratory research aimed at discovery of new knowledge $300000 Costs of testing prototype and design modifications 62000 Quality control during commercial production, including routine testing 264000 of products Construction of research facilities having an estimated useful life of 6 years but no alternative future use 360000 The total amount to be classified and expensed as research and development in 2021 is:____________.
a. $986000.
b. $722000.
c. $422000.
d. $686000.

Answer 1

Answer:

b. $722000.

Explanation:

Total amount to be classified and expended as research and development in 2021

Particulars                                                                         Amount

Laboratory research aimed at discovery of                    $300,000

new knowledge

Cost of testing prototype and design                             $62,000

modification  

Construction of research facilities having                       $360,000

an estimated useful life

Total                                                                                    $722,000