The Best and Krieg Company incurred the following research and development costs during 2016:

Salaries and wages for lab research: $ 350,000 Materials used in R&D projects: 400,000 Purchase of equipment: 85,000 Fees paid to outsiders for R&D projects performed by the outsiders for Best and Krieg: 465,000 Patent filing and legal costs for a developed product: 20,000 In-process research and development (related to the acquisition of Radon, Inc.): 1,200,000 Total: $2,520,000

The equipment has a 3-year life and has no value beyond the current research project for which it was acquired.

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