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In 2016, eGames spent $8,000,000 developing new software. Of this amount, $5,300,000 was spent before July 2016when technological feasibility was established. The product was marketed

In 2016, eGames spent $8,000,000 developing new software. Of this amount, $5,300,000 was spent before July 2016when technological feasibility was established. The product was marketed to consumers beginning in September 2016. eGames estimates total revenue of $20,000,000 to be earned during the softwares 3-year life (calculated from the September 1 product release date). During 2016, revenue of $10,000,000 was recognized.

Required:

1. Prepare the 2016 journal entries to record the development costs.
2. Compute the amount of amortization to be recognized in 2016 and prepare the appropriate journal entry, if any.
3. Next Level What is the justification for treating software development costs differently from R&D costs?

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