software capitalization

Firm reports the following for year 2000 Opening S/f Balance 6100 Capitalization = 5232 Amortization = 3934 Pretax Income = 17218 What would be the adjusted Pretax Income be?


15920 here as well

Could you guys elaborate?

Pretax initial - Capitalization + Amortization

Thats, what I do too. But the Curriculum seems to add the Net Capitalization Effect to the Pretax Income to arrive at the Adjusted pretax income.

that’s because the net is Capitalized -Amortizaton, the same thing

But notice you are changing the sign. Ofcourse the Net is = Captizliated - Amort and you get 1298 However, the curriculum adds this 1298 to 17218 to arrive at 18516. doesn’t subtract to come at 15920

Yes, I think it is sort of implicit.

If you add back you dont get adjusted pre-tax income but EBIT (however in this case there are not interests)

I still don’t see why the curriculum adds it. aren’t we supposed to deduct capital expenses from income statment??? i am so confused helpppppppp pleaseeeeee