Start-Up CostsKling Company was organized in late 2019 and began operations on January 2, 2020. Prior to the start of operations, it incurred the following costs:Costs of hiring new employees$3,000Attorney's fees in connection with the organization of the company12,000Improvements to leased offices prior to occupancy (10-year lease)6,000Costs of pre-opening advertising5,000Required:1. What amount should the company expense in 2019?2. What amount should the company expense in 2020?

The company expenses in 2019 and 2020 are calculated as follows:

Answered: Start-Up Costs Kling Company was…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 6P

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Start-Up Costs

Kling Company was organized in late 2019 and began operations on January 2, 2020. Prior to the start of operations, it incurred the following costs:

Costs of hiring new employees	$3,000
Attorney's fees in connection with the organization of the company	12,000
Improvements to leased offices prior to occupancy (10-year lease)	6,000
Costs of pre-opening advertising	5,000

Required:

1. What amount should the company expense in 2019?

2. What amount should the company expense in 2020?

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