Delaware Company incurred the following research and development cost during 2016:

Salaries and wages for lab research $400,000 Materials used in R&D projects $200,000 Purchase of equipment $900,000 Fees paid to outsiders for R&D projects $320,000 Patent filing and legal costs for developed project $65,000 Salaries, wages, and supplies for R&D work performed For another company under contract $350,000 Total $2,235,000

The equipment has a seven-year life and will be used for a number or research projects. Depreciation for 2016 is $120,000.

Required: Calculate the amount of research and development expense that Delaware should report in its 2016 income statement