On August 1, 2018, Reliable Software Began Developing a Software

question 128

Essay

On August 1, 2018, Reliable Software began developing a software program to allow individuals to customize their investment portfolios. Technological feasibility was established on January 31, 2019, and the program was available for release on March 31, 2019. Development costs were incurred as follows:

$\begin{array}{lr}\text { August } 1 \text { through December } 31,2018 & \$ 6,300,000 \\\text { January } 1 \text { through January } 31,2019 & 1,200,000 \\\text { February } 1 \text { through March } 31,2019 & 1,600,000\end{array}$

Reliable expects a useful life of five years for the software and total revenues of $8,000,000 during that time. During 2019, revenue of $2,000,000 was recognized.

Required:
1. Prepare the journal entries to record the development costs in 2018 and 2019.
2. Calculate the required amortization for 2019.

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Definitions:

Cerebrospinal Fluid

A clear, colorless body fluid found in the brain and spinal cord, serving as a cushion and providing nutrients to nervous system tissues.

MRI

Magnetic Resonance Imaging, a medical imaging technique used to visualize internal structures of the body in detail using magnetic fields and radio waves.

Cerebral Angiography

A medical imaging technique used to visualize the blood vessels in and around the brain, often used to diagnose and assess conditions like aneurysms or blockages.

Electroencephalography

A method of recording electrical activity of the brain by placing electrodes along the scalp.