Question

Check my work 17 On September 30, 2018, Athens Software began developing a software program to shield personal computers from malware and spyware. Technological feasibility was established on February 28, 2019, and the program was available for release on April 30, 2019. Development costs were incurred as follows: 10 points September 30 through December 31, 2018 January 1 through February 28, 2019 March 1 through April 30, 2019 $2,310,000 910,000 510,000 00:5307 eBook Athens expects a useful life of five years for the software and total revenues of $7000,000 during that time. During 2019, revenue of $1,050,000 was recognized. Hint Required: 1. Prepare the journal entries to record the development costs in 2018 and 2019. 2. Calculate the required amortization for 2019. Print References Complete this question by entering your answers in the tabs below Required 1 Required 2 Prepare the journal entries to record the development costs in 2018 and 2019. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction li く Prey 17 of 17 Next >

Answer 1

Answer:

Record the journals as shown below:
Date	Accounts title & explanation	Debit (S)	Credit (S)
2018	Research and development expense	23,10,000
	Cash		23,10,000
	(To record the expenses incurred on research and development)
2019	Research and development expense	9,10,000
	Software and development costs	5,10,000
	Cash		14,20,000
	(To record the software development costs incurred)

2.Calculate the amortization for 2019 as shown below:

Using percentage of revenues method

Amortization= Current revenue/Total revenue* Software development costs

=$10,50,000/$70,00,000*$510,000

=$76,500

Using straight line method

Amortization =1/Useful life* Software devel opment costs

=1/5*$510,000

=$102,000

The expense under straight-line method is greater. Therefore, the amortization is$102,000.