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What portion of computer software costs should be expensed

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Question - Shangra-La Company incurred $2,000,000 ($500,000 in 2011 and $1,500,000 in 2012) to develop a computer software product. $600,000 of this amount was expended before technological feasibility was established in early 2012. The product will earn future revenues of $4,000,000 over its 5-year life, as follows: 2012 - $1,000,000; 2013 - $1,000,000; 2014 - $800,000; 2015 - $800,000; and 2016 - $400,000. What portion of the $2,000,000 computer software costs should be expensed in 2012?

A) $350,000

B) $1,500,000

C) $450,000

D) $400,000

Reference no: EM131796108

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