During November and December of last year, Tommy’s, Inc.,
incurred the following expenses in investigating the feasibility of opening a
new restaurant in town:
Explain the proper treatment of these expenses under the
following scenarios :
a. Tommy’s, Inc., already owns another restaurant in town
and is wanting to expand. Tommy’s, Inc. opens the new restaurant in February of
the current year.
b. Assume chat Tommy’s, Inc. is in the book selling business
and feels chat its bookstore business is nor making a high enough return and it
wanes to move into the restaurant business. le opens the restaurant in February
of the current year.
c. Same as Part b except Tommy’s decides against opening a
restaurant after the investigation .
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