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Asked Jan 17, 2020
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On December 31, 2015, Bit Co. had capitalized costs for a new computer software product with an economic life of five years. Sales for 2016 were 30 percent of expected total sales of the software. At December 31, 2016, the software had a fair value equal to 90 percent of the capitalized cost. What percentage of the original capitalized cost should be reported as the net amount in Bit’s December 31, 2016, balance sheet? a. 70% b. 72% c. 80% d. 90%

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Expert Answer

Step 1

Software development costs

 The software development costs would be recorded as research and development expense till the establishment of technological feasibility. But, when the software development costs are being purchased for internal use or when the technological feasibility is established, then the same is being capitalized. 

Step 2
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Step 3
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