Swift Corporation incorporated on January 1, 2014, and incurred $45,000 in organization costs.
a. Should Swift Corporation capitalize or expense these costs? Defend your answer.
b. If these costs are capitalized, over what period of time should they be amortized? Provide the amortization journal entry for a single year if the maximum period of time is chosen.
c. What arguments could be used to justify capitalizing organization costs but not allocating them to future periods?
d. Assume that during 2014, Swift acquired a patent for $65,000. Should this cost be expensed or capitalized? Why one and not the other?
e. Assume that during 2014, Swift invested $220,000 to research and develop new products. Should these costs be expensed or capitalized?
f. What arguments could be used to justify capitalizing research and development costs, and if capitalized, how should these costs be amortized to future periods?