Concord Company is a U$.$S$.-$based company that designs and builds compressors for large HVAC units. Concord decides to build a new plant in China, its first attempt at doing business internationally. During its start$-$up phase, Concord incurs $$2018000$ of start$-$up costs including $$1009000$ in legal fees, $$706300$ to introduce its product, and another $$302700$ in state fees to the Chinese government to organize the new business entity. Concord Company's CEO fully expects the company to become profitable during its $3$rd year of operations. How should Concord Company account for these costs?

$$Concord can capitalize $$706300$ related to introducing its product, but the other costs must be expensed as incurred.

$$Concord can capitalize $$1009000$ in legal fees, but the other costs must be expensed as incurred.

$$Concord must expense all $$2018000$ start$-$up costs as incurred.

$$Concord can capitalize $$1311700$ related to legal and state fees, but the other costs must be expensed as incurred.

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