Question
1. Larsen began a new development project in 2020. The project reached technological feasibility on September 1, 2021, and was available for release to customers
1. Larsen began a new development project in 2020. The project reached technological feasibility on September 1, 2021, and was available for release to customers at the beginning of 2022. Development costs incurred prior to September 1, 2021, were $4,200,000, and costs incurred from June 30 to the product release date were $1,800,000. The 2022 revenues from the sale of the new software were $3,000,000, and the company anticipates additional revenues of $12,000,000. The economic life of the software is estimated at three years. Amortization of the software development costs for the year 2022 would be:
A.$3600,000.
B. $600,000.
C. $1,400,000.
D. $2,000,000.
2. Ly owns equipment for which it paid $90 million. At the end of 2021, it had accumulated depreciation on the equipment of $27 million. Due to adverse economic conditions, Fryer's management determined that it should assess whether an impairment loss should be recognized for the equipment. The estimated undiscounted future cash flows to be provided by the equipment total $60 million, and the equipment's fair value at that point is $40 million. Under these circumstances, Fryer:
A. Would record no impairment loss on the equipment.
B. Would record a $3 million impairment loss on the equipment.
C. Would record a $23 million impairment loss on the equipment.
D. None of these answer choices are correct.
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