Kling Company was organized in late 2013 and began operations on January 2, 2014. Prior to the start of operations, it incurred the following costs:
Costs of hiring new employees .................................................$ 3,000
Attorney's fees in connection with the organization of the company ......12,000
Improvements to leased offices prior to occupancy (10-year lease) .........6,000
Costs of pre-opening advertising ................................................5,000
Required:
1. What amount should the company expense in 2013? In 2014?
2. Next Level What is the justification of the accounting treatment of these costs?