Nicole organized a new corporation. The corporation began business on April 1 of year 1. She made the following expenditures associated with getting the corporation started: (Leave no answer blank. Enter zero if applicable.)

Expense Date Amount
Attorney fees for articles of incorporation February 10 $40,500
March 1 – March 30 wages March 30 6,550
March 1 – March 30 rent March 30 2,850
Stock issuance costs April 1 24,000
April 1 – May 30 wages May 30 16,375

Required:
(a) What is the total amount of the start-up costs and organizational expenditures for Nicole's corporation?
(b) What amount of start-up costs and organizational expenditures may the corporation immediately expense in year 1?
(c) What amount can the corporation deduct as amortization expense for the organizational expenditures and for the start-up costs for year 1 (not including the amount it immediately expensed)? (Round intermediate calculations to 2 decimal places and final answer to the nearest whole dollar amount.)

Task a:

What is the total amount of the start-up costs and organizational expenditures for Nicole's corporation?

The answer is $49,900.

Task b:

The answer is:

Expense Startup costs of $5,000 and organisational expenditures of $5,000 in year 1

Task c

The answer is:

Organisation expenditure = $1,775

Startup costs = $220

Explanation:

What is the total amount of the start-up costs and organizational expenditures for Nicole's corporation?

Solution:

Startup costs are the cost incurred before the business began - i.e. costs to start a business

Startup costs:

March 1 - March 30 wages  = $6,550 (A)

March 1 - March 30 rent = $2,850 (B)

Organisational expenditures:

Attorney fees for articles of incorporation = $40,500 (C)

We will be adding the all three (A+B+C) = $6,500 + $2,850 + $40,500 = $49,900.

What amount of start-up costs and organizational expenditures may the corporation immediately expense in year 1?

Solution:

Both organisational expenditures as well as startup costs do not exceed $50,000 each. Hence, the corporation can immediately expense Startup costs of $5,000 and organisational expenditures of $5,000 in year 1 of the business.

hat amount can the corporation deduct as amortization expense for the organizational expenditures and for the start-up costs for year 1 (not including the amount it immediately expensed)?

Solution:

Amount deductible as amortization expense:

Organisation expenditure = $1,775

Startup costs = $220

Note:

Please view the attached file for the complete schedule.

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans. 

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

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