How should in development costs be? classified

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Masters Golf? Products, Inc., spent 3 years and $1,200,000 to develop its new line of club heads to replace a line that is becoming obsolete. To begin manufacturing? them, the company will have to invest $1,840,000 in new equipment. The new clubs are expected to generate an increase in operating cash inflows of $760,000 per year for the next 11 years. The company has determined that the existing line could be sold to a competitor for $242,000.

Question 1: How should the $1,200,000 in development costs be? classified?

Question 2: How should the $242,000 sale price for the existing line be? classified?

Question 3: What are all the relevant cash flows for years 0 thru 11??

Reference no: EM132692654

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