bby Inc. is an established computer software company. In 2009, the firm incurred the following costs in the process of designing, developing and producing a new software program using a certain technology to access the Internet:                         Designing and planning             P1,800,000                         Code development                      2,700,000                         Testing                                          900,000                         Production of product master       4,500,000 In 2010, Abby incurred P1,800,000 in costs to produce the software program for sale in 2010. The costs of designing and planning, code development and testing were all incurred before the technological feasibility of the product was established. Abby began marketing the software program in 2010 and earned revenues of P4,320,000 in 2010. Abby estimates that the total revenues over the 4-year life of the product will be P21,600,000. At the end of 2010, Abby was offered P7,200,000 for the rights to distribute the software. Determine: 1. Research and Development Costs to be expensed in 2009 2. Research and Development Costs to be expensed in 2010

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Abby Inc. is an established computer software company. In 2009, the firm incurred the following costs in the process of designing, developing and producing a new software program using a certain technology to access the Internet:

                        Designing and planning             P1,800,000

                        Code development                      2,700,000

                        Testing                                          900,000

                        Production of product master       4,500,000

In 2010, Abby incurred P1,800,000 in costs to produce the software program for sale in 2010. The costs of designing and planning, code development and testing were all incurred before the technological feasibility of the product was established. Abby began marketing the software program in 2010 and earned revenues of P4,320,000 in 2010. Abby estimates that the total revenues over the 4-year life of the product will be P21,600,000. At the end of 2010, Abby was offered P7,200,000 for the rights to distribute the software.

Determine:

1. Research and Development Costs to be expensed in 2009

2. Research and Development Costs to be expensed in 2010

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