Solve with proper explanation In March 2024, Price Company began developing a new software system to be used internally for managing its inventory. Thesoftware integrates customer orders with inventory on hand to automatically place orders for additional inventory when needed. Thesoftware then automatically records inventory as the shipment is received and read by scanners. The software development wascompleted in October 2024 at a cost of $190,000. Of this amount, $33,000 was spent before the application development stage wasestablished. Price expects to use the software for at least five years.Determine the initial amount that Price should capitalize as software development costs.Capitalized costs

WORKING:Total software development cost: $190,000Pre-development costs: $33,000Pre-development costs…

Answered: In March 2024, Price Company began…

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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In March 2021, Price Company began developing a new software system to be used internally for managing its inventory. The software integrates customer orders with inventory on hand to automatically place orders for additional inventory when needed. The software then automatically records inventory as the shipment is received and read by scanners. The software development was completed in October 2021 at a cost of $150,000. Of this amount, $25,000 was spent before the application development stage was established. Price expects to use the software for at least five years. Determine the initial amount that Price should capitalize as software development costs.
Johnson Limited is contemplating the installation of a new system that would allow for automated handling of customer inquiries about their order status, account balances, etc. Currently all such inquiries are handled manually by customer service representatives. The software for the new system would cost $214,000. An additional $169,000 would be required for one-time installation costs. Management estimates that the new system would result in costs of $10,300 per year related to addressing software issues and other technological problems that may arise. However, the new system is expected to reduce labour costs by $65,000 per year. Management estimates that the system would be used for five years. Severance costs related to the employees that would be laid off after implementing the new system would be $22,600. Johnson Limited requires a return of at least 15% on investments of this type. Required: Ignore income taxes. 1. Compute the net annual cost savings promised by the new system.…
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XM, Ltd. was a small engineering firm that built high-tech robotic devices for electronics manufacturers. One very complex device was partially completed at the end of 2018. Barb McLauren, head engineer, knew the experimental technology was a failure and XM would not be able to complete the $20,000,000 contract next year. However, the corporation was getting ready to be sold in January. She told the controller that the device was 80% complete at year-end and on track for successful completion the following spring; the controller accrued 80% of the contract revenue at December 31, 2018. McLauren sold the company in January 2019 and retired. By mid-year, it became apparent that XM would not be able to complete the project successfully and the new owner would never recoup his investment. Requirements For complex, high-tech contracts, how does a company determine the percentage of completion and the amount of revenue to accrue? What action do you think was taken by XM in 2019 with regard…
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Abby Inc. is an established computer software company. In 2009, the firm incurred the following costs in the process of designing, developing and producing a new software program using a certain technology to access the Internet: Designing and planning P1,800,000 Code development 2,700,000 Testing 900,000 Production of product master 4,500,000 In 2010, Abby incurred P1,800,000 in costs to produce the software program for sale in 2010. The costs of designing and planning, code development and testing were all incurred before the technological feasibility of the product was established. Abby began marketing the software program in 2010 and earned revenues of P4,320,000 in 2010. Abby estimates that the total revenues over the 4-year life of the product will be P21,600,000. At the end of 2010, Abby was offered…
Abby Inc. is an established computer software company. In 2009, the firm incurred the following costs in the process of designing, developing and producing a new software program using a certain technology to access the Internet: Designing and planning P1,800,000 Code development 2,700,000 Testing 900,000 Production of product master 4,500,000 In 2010, Abby incurred P1,800,000 in costs to produce the software program for sale in 2010. The costs of designing and planning, code development and testing were all incurred before the technological feasibility of the product was established. Abby began marketing the software program in 2010 and earned revenues of P4,320,000 in 2010. Abby estimates that the total revenues over the 4-year life of the product will be P21,600,000. At the end of 2010, Abby was offered…

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