Compute: (1) Amount to be capitalized as software development cost subject to amortization, (2) Cost of ending inventory, and

(3) Total amount related to the development of computer software that should be expensed when incurred.

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Pagsanjan Softbytes Corporation is engaged in developing computer software for the small business at home computer market. Most of the computer programmers are involved in developmental work designed to produce software that will perform fairly specific tasks in a user friendly manner. Extensive testing of the working manner is performed before it is released to production for preparation of masters and further testing. As a result of careful preparation, Pagsanjan has produced several products that have been very successful in the market place. The following costs were incurred during 2010: Salaries and wages of programmers doing research Expenses related to projects prior to establishment of technological feasibility Expenses related to projects after technological feasibility has been established but before software is available for production Amortization of capitalized software development cost from current and prior years Costs of produce and prepare software for sale Additional data for 2010: Sales of products for the year Beginning inventory Portion of goods available for sale sold during the year P2,060,000 60% 568,000 P940,000 313,600 198,000 107,000 225,200 Pagsanjan Softbytes Corporation is engaged in developing computer software for the small business at home computer market. Most of the computer programmers are involved in developmental work designed to produce software that will perform fairly specific tasks in a user friendly manner. Extensive testing of the working manner is performed before it is released to production for preparation of masters and further testing. As a result of careful preparation, Pagsanjan has produced several products that have been very successful in the market place. The following costs were incurred during 2010: Salaries and wages of programmers doing research Expenses related to projects prior to establishment of technological feasibility Expenses related to projects after technological feasibility has been established but before software is available for production Amortization of capitalized software development cost from current and prior years Costs of produce and prepare software for sale Additional data for 2010: Sales of products for the year Beginning inventory Portion of goods available for sale sold during the year P2,060,000 60% 568,000 P940,000 313,600 198,000 107,000 225,200

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To compute the required amounts lets analyze the given information step by step 1 Amount to be capitalized as software development cost subject to amo... View the full answer