During 2020, PC Software Inc. developed a new personal computer database management software package. Total expenditureson the project were $1,800,000, of which 40% occurred after the technological feasibility of the product had been established.The product was completed and offered for sale on January 1, 2021. During 2021, revenues from sales of the product totaled$3,000,000. The package is expected to be successfully marketable for five years, and the total revenues over the life of theproduct are estimated to be $10,000,000.At December 31, 2021, the carrying value of the software intangible asset isO $864,000.O $504,000.O $1,080,000.O $720,000.

Expenditure prior to technological feasibility cannot be capitalized

Answered: During 2020, PC Software Inc. developed…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Astor Industries plans to automate its production process. The new equipment will cost $460,000 and will provide net cash inflows in the form of annual cost savings of $110,000 each year for 6 years. At the end of year 6, Astor will spend $50,000 to refurbish the equipment so that it can be used for one more year. The equipment will provide cost savings of $65,000 in year 7 and will have a salvage value of $30,000 at the end of year 7. Astor uses a discount rate of 10% to make capital budgeting decisions. What is the net present value of this project? O $24,195 O $39.585 O $67,785 O $125.685 pts O None of the above
On January 1, 2021, the company obtained a $3 million loan with a 10% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 $ 1,300,000 March 1, 2021 750,000 June 30, 2021 300,000 October 1, 2021 650,000 January 31, 2022 495,000 April 30, 2022 810,000 August 31, 2022 1,350,000 On January 1, 2021, the company obtained a $3 million construction loan with a 10% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company’s other interest-bearing debt included two long-term notes of $4,500,000 and $6,500,000 with interest rates of 5% and 7%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company’s fiscal year-end is December 31. Required:1. Calculate the amount of interest that Mason should…
On January 1, 2021, the company obtained a $3 million loan with a 10% interest rate. The building was completed on September 30, 2022. Expenditures on the project were as follows: January 1, 2021 $ 1,080,000 March 1, 2021 900,000 June 30, 2021 320,000 October 1, 2021 700,000 January 31, 2022 720,000 April 30, 2022 1,035,000 August 31, 2022 1,800,000 On January 1, 2021, the company obtained a $3 million construction loan with a 10% interest rate. Assume the $3 million loan is not specifically tied to construction of the building. The loan was outstanding all of 2021 and 2022. The company’s other interest-bearing debt included two long-term notes of $5,000,000 and $7,000,000 with interest rates of 5% and 8%, respectively. Both notes were outstanding during all of 2021 and 2022. Interest is paid annually on all debt. The company’s fiscal year-end is December 31. Required: Calculate the amount of interest that Mason should…
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Stepwise
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