Blue Corporation, a manufacturing company, decided to develop anew line of merchandise. The project began in 2008. Blue had thefollowing expenses in connection with the project:

2012 2013

Salaries $500,000 $600,000

Materials 90,000 70,000

Insurance 8,000 11,000

Utilities 6,000 8,000

Cost of inspection of material

For qualitycontrol 7,000 6,000

Promotionexpenses 11,000 18,000

Advertising 0 20,000

Equipmentdepreciation 15,000 14,000

Cost of marketsurvey 8,000 0

The new product will be introduced for sale beginning in July2010. Determine the amount of the deduction for research andexperimental expenditures for 2012, 2013 and 2014 if:

a. Blue Corporation elects to expense theresearch and experimental expenditures.

b. Blue Corporation elects to amortize theresearch and experimental expenditures over 60 months.