Recently, a group of university students decided to incorporate for the purposes of selling a process to recycle the waste product from manufacturing cheese. Some of the initial costs involved were legal fees and office expenses incurred in starting the business, state incorporation fees, and stamp taxes. One student wishes to charge these costs against revenue in the current period. Other wishes to defer these costs and amortize them in the future.

They have come to you for guidance. Considering the above scenario, respond to the following question:

Explain how should they handle these costs giving them the regulatory requirements?