Question

In year 1, a corporation incurred $3,500,000 of costs related to the development of a new software product. Of these costs, $1,000,000 was incurred after technological feasibility was established. The product development was completed and the product was available for sale to customers early in year 2. The corporation estimated that revenues from the sale of the new product would be $1,200,000 over five years. What amount of expense should the company report for year 1

Answer 1

The amount of amortization expense on software development in year 1 comes out to be $200,000.

What is amortization?

Amortization is the concept being applied to intangible assets to show the reduction in the value over its useful life.

The amount of amortization expense on the development of software can be determined by dividing the cost of $1,000,0000 spent for establishing technological feasibility by the number of years, that is, 5 years till the asset become sold.

Therefore, in year 1, the cost of amortization comes out to be $200,000 after incurring the technological feasibility.

Learn more about the amortization expense in the related link:

https://brainly.com/question/16523003

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