(Accounting for Computer Software Costs) New Jersey Inc. has capitalized computer software costs of $3,600,000 on its new “Trenton” software package. Revenues from 2003 (first year) sales are

$2,000,000. Additional future revenues from “Trenton” for the remainder of its economic life, through 2007, are estimated to be $10,000,000.

Instructions

(a) What method or methods of amortization are to be applied in the write-off of capitalized computer software costs?

(b) Compute the amount of amortization for 2003 for “Trenton.”