Question

Arizona Communications contracted to set up a call center for the City of Phoenix. Under the terms of the contract, Arizona Communications will design and set-up a call center with the following costs: Design of call center Computers, servers, telephone equipment Software Installation and testing of equipment Selling commission | Annual service contract $20,000 $550,000 $170,000 $30,000 $50,000 $100,000 In addition, Arizona Communications will maintain and service the equipment and software to ensure smooth operations of the call center for an annual fee of $180,000. Ownership of equipment installed remains with the City of Phoenix. The contract costs that should be capitalized is

Answer 1

Answer:

Contract Costs that should be capitalized :

Design of Call Center                              20000

Computers,servers, telephone equipment 550000

Software                                                 170000

Installation and testing of equipment          30000

Selling Commission                                  50000

Total    820000