Question

Accounting for Software Development Costs During 2020, PC Software Inc. developed a new personal computer database management software package. Total experiditures on the project were $4,800,000, of which 40% occurred after the technological feasibility of the product had been established. The product was completed and offered for sale on January 1, 2021. During 2021, revenues from sales of the product totaled $7,680,000. The package is expected to be successfully marketable for five years, and the total revenues over the life of the product are estimated to be $32,000,000 Required a. Prepare the journal entry to account for the development of this product in 2020 Account Name Dr Dans b. Prepare the journal entry to record the amortization of capitalized computer software development costs in 2021. Account Name Dr. Cr. What disclosures are required in the December 31, 2021, financial statements regarding computer software costs? Enter the missing items from the following note disclosure At December 31, 2021, the unamortized software intangible asset totals This is equal to $ originally capitalized less amortization in 2021 of The amount charged to expense as amortization of software intangible asset in 2021 was The estimated net realuable value of computer software is greater than the remaining unamortized software intangible asset d. Suppose this product were developed for internal use. How would your answers to all and change?

Answer 1

* Answes :- while researching & developing developing an Intangible asset, organisation pass through 2 stages. (1) Identification of technical feasibility (22 After achieving technical feasibility stage → Accounting Trecetment organisation should write off the totece expenditure in the profit and loss statement which is incurred during research phase and organisation should capitcelise all the pacpenses which are incurred during development phase/ aftes technical feasibility stage.

In giren case, Total expenditure on project $ 4,800,000 of which 40% incurred aftes technical feasibility of prodrect established Therefore, Amount to be capitalised $ 4,800,000 X 40%. $ 1,920,000 Answer (@:- Jownw entry to account development of product. DD $ 1920,000 Ale Name Intangible Asset Alc TO Development expenditure Alc (Being: Development esp. capitalised) 1920.000

Ans to CC) :- Unamortised value $ I, S36.000 original value Amortisation $7.920,000 Less $ 3su, o Amortisation expense $3su, ooo
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