Ch 11 handout solution - open house before the grand...

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AMIS 626 – Chapter 11 Names __________________________________________________________________ 3. On July 1 of the current year, the Buckeye Partnership was formed to operate a talent agency. The partnership paid $4,000 in legal fees for drafting the partnership agreement, and $6,000 for accounting fees related to organizing the entity. It also paid $15,000 in syndication costs to locate and secure investments from limited partners. In addition, before the business began official operations, the entity paid $16,000 for advertising and $35,000 in costs related to an
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Unformatted text preview: open house before the grand opening of the agency. The partnership formally began business on October 1.- How much may the partnership deduct in its initial year of operations? Organizational costs Start-up costs Total costs 10,000 $51,000 Immediate expense 5,000 4,000 (5000- [51,000-50,000]) Amortization $83 (5000 x [3/180]) 783 ([51,000-4000] x [3/180]) Initial year deduction $5,083 4,783 Total initial year deduction $9,866 (5083+4783)...
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