INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
9th Edition
ISBN: 9781260216141
Author: SPICELAND
Publisher: MCG CUSTOM
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Textbook Question
Chapter 10, Problem 10.31E
Software development costs
• LO10–8
Early in 2018, the Excalibur Company began developing a new software package to be marketed. The project was completed in December 2018 at a cost of $6 million. Of this amount, $4 million was spent before technological feasibility was established. Excalibur expects a useful life of five years for the new product with total revenues of $10 million. During 2019, revenue of $3 million was recognized.
Required:
- 1. Prepare a
journal entry to record the 2018 development costs. - 2. Calculate the required amortization for 2019.
- 3. At what amount should the computer software costs be reported in the December 31, 2019,
balance sheet ?
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• X Software began a new development project in 2021. The project reached technological
feasibility on June 30, 2021 and was available for release to customers at the beginning of 2022.
Development costs incurred prior to June 30, 2021 were $3,200,000 and costs incurred from
June 30 to the product release date were $1,400,000. 2022 revenues from the sale of the new
software were $4,000,000 and the company anticipates additional revenues of $6,000,000. The
economic life of the software is estimated at four years. 2022 amortization of the software
development costs would be:
O $0.
O $350,000.
O $1,840,000.
O $560,000.
On September 30, 2024, Athens Software began developing a software program to shield personal computers from malware and
spyware. Technological feasibility was established on February 28, 2025, and the program was available for release on April 30, 2025.
Development costs were incurred as follows:
September 30 through December 31, 2024
January 1 through February 28, 2025
March 1 through April 30, 2025
$ 2,220,000
820,000
420,000
Athens expects a useful life of four years for the software and total revenues of $6,000,000 during that time. During 2025, revenue of
$1,200,000 was recognized.
Required:
Prepare a journal entry in each year to record development costs for 2024 and 2025.
CH5 #10 A company is considering two alternative marketing strategies for a new product. Introducing the product will require an outlay of $15,000. With a low price, the product will generate cash proceeds of $10,000 per year and will have a life of two years. With a high price, the product will generate cash proceeds of $18,000 but will have a life of only one year. The hurdle rate for this project is 0.05.
Which marketing strategy should be accepted?
Chapter 10 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/CONNECT
Ch. 10 - Prob. 10.1QCh. 10 - Prob. 10.2QCh. 10 - Prob. 10.3QCh. 10 - Prob. 10.4QCh. 10 - Prob. 10.5QCh. 10 - Prob. 10.6QCh. 10 - When an asset is acquired and a note payable is...Ch. 10 - Explain how assets acquired in exchange for equity...Ch. 10 - Prob. 10.9QCh. 10 - What account is credited when a company receives...
Ch. 10 - Prob. 10.11QCh. 10 - Identify the two exceptions to valuing property,...Ch. 10 - In what situations is interest capitalized?Ch. 10 - Define average accumulated expenditures and...Ch. 10 - Explain the difference between the specific...Ch. 10 - Prob. 10.16QCh. 10 - Prob. 10.17QCh. 10 - Explain the accounting treatment of costs incurred...Ch. 10 - Explain the difference in the accounting treatment...Ch. 10 - Prob. 10.20QCh. 10 - Prob. 10.21QCh. 10 - Prob. 10.22QCh. 10 - Prob. 10.23QCh. 10 - Acquisition cost; machine LO101 Beavert on Lumber...Ch. 10 - Prob. 10.2BECh. 10 - Prob. 10.3BECh. 10 - Cost of a natural resource; asset retirement...Ch. 10 - Asset retirement obligation LO101 Refer to the...Ch. 10 - Prob. 10.6BECh. 10 - Acquisition cost; noninterest-bearing note LO103...Ch. 10 - Prob. 10.8BECh. 10 - Fixed-asset turnover ratio LO105 Huebert...Ch. 10 - Fixed-asset turnover ratio; solve for unknown ...Ch. 10 - Prob. 10.11BECh. 10 - Nonmonetary exchange LO106 Refer to the situation...Ch. 10 - Nonmonetary exchange LO106 Refer to the situation...Ch. 10 - Prob. 10.14BECh. 10 - Prob. 10.15BECh. 10 - Research and development LO108 Maxtor Technology...Ch. 10 - Prob. 10.17BECh. 10 - Research and development; various types LO108...Ch. 10 - Prob. 10.19BECh. 10 - Acquisition costs; land and building LO101 On...Ch. 10 - Acquisition cost; equipment LO101 Oaktree Company...Ch. 10 - Prob. 10.3ECh. 10 - Cost of a natural resource; asset retirement...Ch. 10 - Intangibles LO101 In 2018, Bratten Fitness...Ch. 10 - Goodwill LO101 On March 31, 2018, Wolfson...Ch. 10 - Prob. 10.7ECh. 10 - Prob. 10.8ECh. 10 - Prob. 10.9ECh. 10 - Acquisition costs; noninterest-bearing note ...Ch. 10 - Prob. 10.11ECh. 10 - Prob. 10.12ECh. 10 - Prob. 10.13ECh. 10 - Prob. 10.14ECh. 10 - Nonmonetary exchange LO106 [This is a variation...Ch. 10 - Prob. 10.16ECh. 10 - Nonmonetary exchange LO106 [This is a variation...Ch. 10 - Prob. 10.18ECh. 10 - Prob. 10.19ECh. 10 - Prob. 10.20ECh. 10 - FASB codification research LO101, LO106, LO107,...Ch. 10 - Prob. 10.22ECh. 10 - Interest capitalization LO107 On January 1, 2018,...Ch. 10 - Interest capitalization LO107 On January 1, 2018,...Ch. 10 - Interest capitalization; multiple periods LO107...Ch. 10 - Research and development LO108 In 2018, Space...Ch. 10 - Prob. 10.27ECh. 10 - IFRS; research and development LO108, LO109...Ch. 10 - IFRS; research and development LO109 IFRS NXS...Ch. 10 - Prob. 10.30ECh. 10 - Software development costs LO108 Early in 2018,...Ch. 10 - Prob. 10.32ECh. 10 - Intangibles; start-up costs LO101, LO108 Freitas...Ch. 10 - Prob. 10.34ECh. 10 - Prob. 10.1PCh. 10 - Prob. 10.2PCh. 10 - Prob. 10.3PCh. 10 - Prob. 10.4PCh. 10 - Acquisition costs; journal entries LO101, LO103,...Ch. 10 - Prob. 10.6PCh. 10 - Nonmonetary exchange LO106 On September 3, 2018,...Ch. 10 - Prob. 10.8PCh. 10 - Interest capitalization; specific interest method ...Ch. 10 - Prob. 10.10PCh. 10 - Research and development LO108 In 2018,...Ch. 10 - Prob. 10.12PCh. 10 - Judgment Case 101 Acquisition costs LO101, LO103,...Ch. 10 - Research Case 102 FASB codification; locate and...Ch. 10 - Judgment Case 103 Self-constructed assets LO107...Ch. 10 - Judgment Case 104 Interest capitalization LO107...Ch. 10 - Prob. 10.6BYPCh. 10 - Prob. 10.7BYPCh. 10 - Judgment Case 108 Research and development LO108...Ch. 10 - Prob. 10.9BYPCh. 10 - Prob. 10.11BYPCh. 10 - Ethics Case 1012 Research and development LO108...Ch. 10 - Prob. 10.13BYPCh. 10 - Prob. 10.14BYPCh. 10 - Prob. 10.15BYPCh. 10 - Prob. 10.16BYPCh. 10 - Continuing Cases Target Case LO101, LO105 Target...
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