Reference no: EM133120555

Question - Jensen Inc. has created a new website that it believes will help families share photos more easily, create calendars and photo books, and share and edit family videos. The company believes that this new website will go viral and has established a new division called "Photoshare" for this effort.

Jensen's accounting team is preparing the first financial statements for Photoshare for the fiscal year-ended March 31, 2022, as required by their investors. During the year, Jensen incurred the following costs to develop this website:

-$1 million to create the web platform capable of storing photos and allowing multiple users to view and edit photos

-$100,000 for website design, including the photo that appears on the homepage and the placement of each tab and link

-$50,000 to content writers, who wrote the "Welcome screen" message, plus the instructions for users on how to use the site

The accounting team has done some preliminary research and concluded that this website as "internal-use" software and will not be sold or leased to outside parties.

1. Should the $1 million cost to create the web platform capable of storing photos and allowing multiple users to view and edit photos be treated as an asset or expense on Photoshare's financial statements?

2. Should the $100,000 cost for website design, including the photo that appears on the homepage and the placement of each tab and link be treated as an asset or expense on Photoshare's financial statement?

3. Should the $50,000 cost to content writers, who wrote the "Welcome screen" message, plus the instructions for users on how to use the site be treated as an asset or expense on Photoshare's financial statements?