Consider the following events for Byer's Innovations Co. that occurred during 2014.
1. Leased factory space from Whole Properties Company for a one-year period starting November 1, 2014. Six months of rent at $3,000 per month was paid in advance.
2. Incurred $35,000 of research costs for new products. No new products were developed but management believes the research will lead to new products.
3. Used power and water during December for manufacturing. Byer's Innovations Co. will receive the bill in January 2015 and pay it in February 2015. Power and water costs totaling $55,000 have been recorded for the period January 1 to November 30, 2014.
4. New packaging equipment costing $48,000 was installed during November 2014. The equipment was tested in December and will be used for packaging starting in January 2015. The equipment has an estimated useful life of four years and an estimated residual value of $4,000. The company uses straight-line depreciation.
Instructions
For each event, indicate the amount of expense that should be recognized in the 2014 income statement.