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What amount should the software costs be reported

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During 2017, Sandhill Enterprises Ltd., a private entity, incurred $4.5 million in costs to develop a new software product called Dover. Of this amount, $1.6 million was spent before establishing that the product was technologically and financially feasible. Dover was completed by December 31, 2017, and will be marketed to third parties. Sandhill expects a useful life of 6 years for this product, with total revenues of $14 million. During 2018, Sandhill realized revenues of $2.0 million from sales of Dover.

Problem 1: Prepare the entry to record amortization at December 31, 2018 using the straight line method

Problem 2: At what amount should the software costs be reported in the December 31, 2018 balance sheet?

Reference no: EM132698673

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