Majoli Inc. has capitalized computer software costs of $3,900,000 on its new “Trenton” software package. Revenues from 2012 (first year) sales are $2,000,000. Additional future revenues from “Trenton” for the remainder of its economic life, through 2016, are estimated to be $10,000,000.
Instructions
(a) What method or methods of amortization are to be applied in the write-off of capitalized computer software costs?
(b) Compute the amount of amortization for 2012 for “Trenton.”