ExpertHard1 markMultiple Choice
CPA · Question 24 · Area II: Technical Accounting
TechCorp is developing software for internal use. <br/>- Preliminary Project Stage costs: $50,000<br/>- Application Development Stage costs (coding, testing): $200,000<br/>- Data Conversion costs: $30,000<br/>- Training costs: $20,000<br/>- Post-implementation maintenance: $15,000<br/><br/>What amount should be capitalized as software assets?
TechCorp is developing software for internal use. <br/>- Preliminary Project Stage costs: $50,000<br/>- Application Development Stage costs (coding, testing): $200,000<br/>- Data Conversion costs: $30,000<br/>- Training costs: $20,000<br/>- Post-implementation maintenance: $15,000<br/><br/>What amount should be capitalized as software assets?
Answer options:
A.
$250,000
B.
$200,000
C.
$230,000
D.
$315,000
How to approach this question
Capitalize: Application Development (Design, Coding, Testing, Installation). Expense: Preliminary Project, Training, Data Conversion, Maintenance.
Full Answer
B.$200,000✓ Correct
B
ASC 350-40 requires capitalization only during the Application Development Stage. Preliminary costs ($50k), Training ($20k), Data Conversion ($30k), and Maintenance ($15k) are expensed.
Common mistakes
Capitalizing training or preliminary costs.
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