please provide answer and explanation to the question below … thanks in advance! East corp. incurred software development costs of $108,000 to establish technological feasibility of income tax software for personal users. In addition, East incurred tessting costs of $88,000 after establishing technological feasibility and duplication, printing, and packaging costs of $98,000 West corp. expended $60,000 for special equipment used solely for the devlopment of product X. the equipment has no other use and has an estimated life of 4 years and no salvage value. West also incurred $280,000 for labor and material costs in producing a prototype of the product. According to US GAAP, what amoutn should East and West capitalize. East …West A. $98,000 … $280,000 B. $108,000 … $0 C. $186,000 … $0 D. $186,000 … $60,000
I would say C. East incures the testing costs after the product was been deemed technologically feasible, plus the duplication, printing and packing costs. West has identified the product, but not the market, the costs, the intent to produce the good. It all gets expensed.
This time: You are right map, i didn’t read properly
map1 Wrote: ------------------------------------------------------- > I would say C. > > East incures the testing costs after the product > was been deemed technologically feasible, plus the > duplication, printing and packing costs. > > West has identified the product, but not the > market, the costs, the intent to produce the good. > It all gets expensed. Map how do you remember all of this? I glanced at this topic yesterday i can barely remember.
@pepp: June or decembre?
beause it is odd
June. what would i do on this site if i was already not panicking. I have about 70% of the course left
C. For East, cost for establishing feasibility should be expensed. Costs after feasibility are captalized. For west, all R&D costs are expensed. Not very sure.
Pepp, you are like my husband. I studying for months and will probably not pass. He glances over information, uses logic, finishes the exam with an hour left and scores one of the highest on the test.
There is another technique to doing this problem. a) read the question (but don’t do any computation), just glance thru the answer choices. b) You see, 2 of the same values, just know answer has to be one of them. c) do a intersection of these values. YOU WILL GET C!!!
I picked C too, but b/c of map’s reasoning.
better use reason than smart skimming
map, i’d use reason if i knew where to start. i dont have enough time for reason.
Pepp - what do you mean by intersection? - thanks
San you easily eliminate option a. because you know answer has to be either c or d for East (same choices) and similarly you know answer has to be b or c for west. the only way you could have east and west is if you Choose C.
Ah - I see what you mean. Thanks, Pepp