The partnership will use the accrual method of accounting. The following are some of the costs incurred during Heron’s first year of operations.

Legal fees to form partnership $ 2,000 Advertising for ‘‘Grand Opening’’ 15,000 Advertising after opening 10,000 Consulting fees for establishing accounting system 5,000 Rent, at $2,000 per month 12,000 Utilities, at $600 per month 3,600 Salaries to sales clerks 30,000 Payments to Carl and Megan for services ($5,000 per month each for three months) 30,000 Tax return preparation expense 5,000 In addition, Heron purchased all of the assets of Granny Newcombs, Inc. Of the total purchase price for these assets, $60,000 was allocated to the Granny Newcombs trade name and logo.

Determine how each of the above costs is treated by the partnership, and identify the period over which the costs can be deducted, if any.