Toni Owns a Gourmet Dog Treat Shop Downtown

question 20

Multiple Choice

Toni owns a gourmet dog treat shop downtown.She spends $2,800 investigating opening another dog treat shop in Northtown and an additional $3,100 investigating a new location in Southtown.Toni does open the Northtown shop,but does not open the Southtown shop.

• A)Toni must capitalize and amortize the Northtown investigation costs,but can immediately deduct the Southtown investigation costs.
• B)Toni must capitalize and amortize the Northtown investigation costs,but the Southtown investigation costs are not deductible at all.
• C)Both the Northtown and the Southtown investigation costs must be capitalized and amortized.
• D)Both the Northtown and the Southtown investigation costs are currently deductible.

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Definitions:

Bailee Compensation

The payment made to a bailee for the service of temporarily holding or storing the bailor's property.

Gratuitous Bailment

A legal relationship where one party, the bailor, temporarily transfers possession of an item to another, the bailee, without expectation of payment or benefit.

Bailee's Lien

The right of a bailee to retain possession of a bailor's property as security for unpaid charges related to the property.

Bailor

A person who entrusts their property into the care of another, known as the bailee, for a particular purpose.