Martinez company incurred the following costs during 2019 in connection with its research and development activities. 1. cost of equipment acquired that will have alternative. 2. uses in future r& d projects over the next 5 years (uses straight-line depreciation) $330,0003. materials consumed in r& d projects 59,0004. consulting fees paid to outsiders for r& d projects 100,0005. personnel costs of persons involved in r& d projects 128,0006. indirect costs reasonably allocable to r& d projects 50,0007. materials purchased for future r& d projects 34,000

Total expenses         337,000

Explanation:

Compute the amount to be reported as research and development expense by Martinez on its income statement for 2019

Materials consumed   59,000

Consulting fees paid 100,000

Salaries cost               128,000

Indirect cost                 50,000    

Total expenses         337,000

The materials which aren't used are not expense of the period. they will become expense when used not at purchase date.

The depreciation on the equipment will not be part of the expenses as it will be capitalized as it can be used in future projects.

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