Help Understanding Amortization of Capitalized Software Cost

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  • September 10, 2015 at 2:23 am #196758
    Anonymous
    Inactive

    Please help with understanding the concept of this question. I don’t understand how the answer is $450,000

    On December 31, Year 1, Byte Co. had capitalized software cost of 600k with an econcomic life of 4 years. Sales for year 2 were 10% of expected total sales of the software. At December 31, Year 2, the software had a net realization value of $480,000. In its December 31, Year 2 balance sheet, what amount should Byte report as net capitalized cost of computer software?

    a. 432k

    b. 480k

    c. 450k

    d. 540k

    Thank you for your help!!

    Angie

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