Early in 2013, the Excalibur Company began developing a new software package to be marketed. The project was completed in December 2013 at a cost of $14 million. Of this amount, $7 million was spent before technological feasibility was established. Excalibur expects a useful life of five years for the new product with total revenues of $18 million. During 2014, revenue of $9 million was recognized.

2. Calculate the required amortization for 2014

Required amortization

Percentage-of-revenue method-

Straight-line-method-

3. At what amount should the computer software costs be reported in the December 31, 2014, balance sheet? (Enter your answers in whole dollars.)

Balance sheet

Software development costs-

Less: Amortization to date-

Net-