Early In 2021, the Excalibur Company began developing a new software package to be marketed. The project was completed in December 2021 at a cost of $13 million. Of this amount, $10 million was spent before technological feasibility was established. Excalibur expects a useful life of five years for the new product with total revenues of $16 million. During 2022, revenue of $4 million was recognized. Required: Prepare a journal entry to record the 2021 development costs. (If no entry is required for a transaction/event, select "No Journal entry required" In the first account fleld. Enter your answers in whole dollar not in millions.)

Early In 2021, the Excalibur Company began developing a new software package to be marketed. The project was completed in December 2021 at a cost of $13 million. Of this amount, $10 million was spent before technological feasibility was established. Excalibur expects a useful life of five years for the new product with total revenues of $16 million. During 2022, revenue of $4 million was recognized. Required: Prepare a journal entry to record the 2021 development costs. (If no entry is required for a transaction/event, select "No Journal entry required" In the first account fleld. Enter your answers in whole dollar not in millions.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Early in 2021, the Excalibur Company began developing a new software package to be marketed. The project was completed in December 2021 at a cost of $6 million. Of this amount, $4 million was spent before technological feasibility was established. Excalibur expects a useful life of five years for the new product with total revenues of $10 million. During 2022, revenue of $3 million was recognized.Required:Prepare a journal entry to record the 2021 development costs.
Early in 2024, the Excalibur Company began developing a new software package to be marketed. The project was completed in December 2024 at a cost of $15 million. Of this amount, $11 million was spent before technological feasibility was established. Excalibur expects a useful life of five years for the new product with total revenues of $20 million. During 2025, revenue of $6 million was recognized. Required: Prepare a journal entry to record the 2024 development costs.
On September 30, 2021, Athens Software began developing a software program to shield personal computers from malware and spyware. Technological feasibility was established on February 28, 2022, and the program was available for release on April 30, 2022. Development costs were incurred as follows: September 30 through December 31, 2021 January 1 through February 28, 2022 March 1 through April 30, 2022 Athens expects a useful life of five years for the software and total revenues of $6,500,000 during that time. During 2022, revenue of $1,170,000 was recognized. Required: Prepare a journal entry in each year to record development costs for 2021 and 2022. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet < 1 2 Record the development costs for 2021. Note: Enter debits before credits. Date 2021 $2,280,000 880,000 480,000 General Journal Debit Credit
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During 2020, PC Software Inc. developed a new personal computer database management software package. Total expenditures on the project were $1,800,00O, 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 $3,000,000. 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 $10,000,000. At December 31, 2021, the carrying value of the software intangible asset is $864,000. O $504,000. O $1,080,000. O $720,000.
During 2020. PC Software Inc. developed a new personal computer database management software package. To- tal expenditures on the project were $3,000,000, 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 $4,800,000. 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 $20,000,000. Required a. Prepare the journal entries to account for the development of this product in 2020. b. Prepare the journal entries to record the amortization of capitalized computer software development costs in 2021. c. What disclosures are required in the December 31, 2021, financial statements regarding computer software costs? d. Suppose this product were developed for internal use. How would your answers to (a), (b), and (c) change?
A company began a new software development project in 2023. The project reached technological feasibility on June 30, 2024, and was available for release to customers at the beginning of 2025. Development costs incurred prior to June 30, 2024, were $3,260,000 and costs incurred from June 30, 2024, to the product release date were $1,460,000. The economic life of the software is estimated at four years. For what amount will software be capitalized in 2024?
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On August 1, 2021, Reliable Software began developing a software program to allow individuals to customize their investment portfolios. Technological feasibility was established on January 31, 2022, and the program was available for release on March 31, 2022. Development costs were incurred as follows: August 1 through December 31, 2021 $ 6,400,000 January 1 through January 31, 2022 1,210,000 February 1 through March 31, 2022 1,610,000 Reliable expects a useful life of five years for the software and total revenues of $8,100,000 during that time. During 2022, revenue of $2,106,000 was recognized. Required:Prepare the journal entries to record the development costs in 2021 and 2022.
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