Ch-12

During 2017, Sand 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. Sand expects a useful life of 6 years for this product, with total revenues of $14 million. During 2018, Sand realized revenues of $2.0 million from sales of Dover.

Assuming Sandhill reports under ASPE, prepare the journal entries that are required in 2017 to record the above.

Account Titles and Explanation Debit Credit (To record costs spent before establishing the product) (To record costs to develop the new software product)