Axcel Software Began a New Development Project in 2017

question 60

Multiple Choice

Axcel Software began a new development project in 2017. The project reached technological feasibility on June 30, 2018, and was available for release to customers at the beginning of 2019. Development costs incurred prior to June 30, 2018, were $3,200,000 and costs incurred from June 30 to the product release date were $1,400,000. The 2019 revenues from the sale of the new software were $4,000,000, and the company anticipates additional revenues of $6,000,000. The economic life of the software is estimated at four years. Amortization of the software development costs for the year 2019 would be:

• A) $0.
• B) $350,000.
• C) $1,840,000.
• D) $560,000.

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Definitions:

Product-Development Activities

The series of tasks involved in designing, creating, and bringing a new product to market.

Cash Flow Problems

Arise when an organization struggles to maintain sufficient cash inflows to meet its outgoing financial obligations.

Human Limitations

Refers to the natural constraints on what individuals can physically and mentally achieve.

Best Alternative

The most desirable option available to a person or entity when their first choice is not feasible.