Question

Problem 6-42 (Algorithmic) (LO. 3) Henrietta, the owner of a very successful hotel chain in the Southeast, is exploring the possibility of expanding the chain into a city in the Northeast. She incurs $46,000 of expenses associated with this investigation. Based on the regulatory environment for hotels in the city, she decides not to expand. During the year, she also investigates opening a restaurant that will be part of a national restaurant chain. Her expenses for this are $53,400. She proceeds with opening the restaurant, and it begins operations on May 1. Determine the amount that Henrietta can deduct in the current year for investigating these two businesses. In your computations, round the per-month amount to the nearest dollar and use rounded amount in subsequent computations. a. The deductible amount of investigation expenses related to expansion of her hotel chain into another city: $ 46,000 b. The deductible amount of investigation expenses related to opening a restaurant: $ 3,941 X

Answer 1

EVen though Henyietta decides not to her hoten chain into anothey city, the investigation expenses of 16,000 aye deductible n the arveht yeav. Becalse, Henrietta is in the hotel bisiness, all investigation oenses associated with the hotel business ave deductible in the the expansion of year pcud oy ncuved. Bo cau se vect auvent bus ness, she can deduut ony part of these nvestigation epenses . of the 53,400, an amovnt of1600 edution ov excess over s0,000)can be 1mmediatly expensed The balance 51, s00 C 5300-1600) is was not n the Soo $3400 period 0 mocths at the yate of$283 oVey a amoyti zed $51,800 1S0 = 287.7 younded do $238 Per moth commenng in may (the mont the business is stey ted The de duutible amourt o investigaion ex penses eladed opening $ 1600 288 x g moths) 1600 t23oM b a Yestaurent is 39o4 to 43904