The Cougar Company was formed in early 2010.At the time of formation, Cougar spent the following amounts: accounting fees, $4, 000; legal fees, $8, 000; stock certificate costs, $3, 000; initial franchise fee, $10, 000; initial lease payment, $5, 000; promotional fees, $3, 000.Cougar intends to capitalize and amortize intangibles over the maximum allowable period in accordance with generally accepted accounting principles.Based on this strategy, what is Cougar's expense associated with organization costs in 2010?

A) $ 6, 000
B) $18, 000
C) $28, 000
D) $33, 000

Question

Farjana Lavlu · Accepted Answer

Final Answer : B, Explanation :  The organization costs that Cougar intends to capitalize and amortize are accounting fees, legal fees, stock certificate costs, initial franchise fee, initial lease payment, and promotional fees, which total $33,000. Therefore, Cougar's expense associated with organization costs in 2010 is $18,000 ($33,000 amortization expense over a maximum allowable period minus $15,000 amortization expense for the first year).

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