Task: Accounting for R & D Costs
Martinez Company incurred the following costs during 2010 in connection with its research and development activities.
Cost of equipment acquired that will have alternative uses in future R & D
projects over the next 5 years (uses straight-line depreciation). $330,000
Materials consumed in R & D projects 59,000
Consulting fees paid to outsiders for R & D projects 100,000
Personnel costs of persons involved in R & D projects 128,000
Indirect costs reasonable allocable to R & D projects 50,000
Materials purchased for future R & D projects 34,000
Compute the amount to be reported as research and development expense by Martinez on its income statement for 2010. Assume equipment is purchased at beginning of year.