A company began developing computer software to be sold as a separate product on January 1, year 1. During the planning, coding, and testing phases, the company incurred $1,300,000 of costs. On June 30, year 1, the product was determined to be technologically feasible. The company began producing product masters of the software and incurred an additional $750,000 of costs from July 1, year 1, through September 30, year 1. After the software was available for release on October 1, year 1, the company incurred an additional $275,000 of costs relating to maintenance and customer support. What amount of software-related costs should be capitalized

Question

Business

Braylen

21 June, 01:56

A company began developing computer software to be sold as a separate product on January 1, year 1. During the planning, coding, and testing phases, the company incurred $1,300,000 of costs. On June 30, year 1, the product was determined to be technologically feasible. The company began producing product masters of the software and incurred an additional $750,000 of costs from July 1, year 1, through September 30, year 1. After the software was available for release on October 1, year 1, the company incurred an additional $275,000 of costs relating to maintenance and customer support. What amount of software-related costs should be capitalized

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Xavier Kramer · Answer 1

The sofware-relate cost to capitalized will be 1,300,000

Explanation:

The cost than a business can capitalize will stop once the testing phase is complete.

The production cost, are cost of the period. It will not be capitalize through intangible asset software.

Post-implementation. The cost after the implementation of the software will be treated as expenses. The 275,000 maintenance and customer support will not be capitalized. It will be treated as expense

The software amount will be 1,300,000 which is the value of the cost incurred in the testing phases