CLASS QUESTIONS 12CMWF - year Explain It depends on which...

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CLASS QUESTIONS (12C) (1) If a company is developing computer software that it intends to sell, does it capitalize or expense the costs of developing the product (Appendix 12A)? Expense it because it has not established technological feasibility yet. (2) Pokemontendo Company has capitalized software costs of $700,000 for a software game. Sales of this product for the first year totaled $420,000 and Pokemontendo expects to generate additional sales of $980,000 in the next three years. The expected economic life of the product is four years. How much amortization should be recorded for the first
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Unformatted text preview: year? Explain. It depends on which method is used…. (420/980)/700,000 = 300,000 (percent of revenue approach) 700,000/4 = 175,000 (straight line). The company would use Percent of revenue approach because it results in the greatest amortization charge. (3) Refer to Illustration 12A-1 on p. 616 pertaining to Analogic Corporation. Over approximately how many years does Analogic amortize capitalized software costs? 3 years....
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This note was uploaded on 09/02/2011 for the course MGT 3305 taught by Professor Reed during the Spring '08 term at Baylor.

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