January 1, year 1, a company has capitalized software costs of $1,200,000 related to software that it intends to begin selling in year 1. The company estimates that the software has an economic life of four years, and will generate $3,000,000 of sales and leasing revenue over the next four years. In year 1, the company earned $1,000,000 in sales and leasing revenue related to the software. What amount of expense should be recognized from amortizing the software costs for the year ended December 31, year 1? A. $300,000 B. $350,000 C. $400,000 D. $1,200,000
January 1, year 1, a company has capitalized software costs of $1,200,000 related to software that it intends to begin selling in year 1. The company estimates that the software has an economic life of four years, and will generate $3,000,000 of sales and leasing revenue over the next four years. In year 1, the company earned $1,000,000 in sales and leasing revenue related to the software. What amount of expense should be recognized from amortizing the software costs for the year ended December 31, year 1? A. $300,000 B. $350,000 C. $400,000 D. $1,200,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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January 1, year 1, a company has capitalized software costs of $1,200,000 related to
software that it intends to begin selling in year 1. The company estimates that the software has
an economic life of four years, and will generate $3,000,000 of sales and leasing revenue over
the next four years. In year 1, the company earned $1,000,000 in sales and leasing revenue
related to the software. What amount of expense should be recognized from amortizing the
software costs for the year ended December 31, year 1?
A. $300,000
B. $350,000
C. $400,000
D. $1,200,000
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