Jenny and Jim have created a new website that they think will help families share photos more easily, create calendars and photo books, and share and edit family videos. Hoping their new site will go viral, Jenny and Jim named their new company PhotoShare, Inc. and are preparing their first financial statements as required by their investors. Jenny and Jim have incurred the following costs to develop their website:

a. $1 million to create the web platform capable of storing photos and allowing multiple users to view and edit photos

b. $100,000 for website design, including the photo that appears on the homepage and the placement of each tab and link

c. $50,000 to content writers, who wrote the Welcome screen message, plus who wrote instructions for users on how to use the site

1. Using only the Codification, research whether Jenny and Jim should treat each cost as an asset or expense on the company's financial statements. Include excerpts as helpful in supporting your responses.

2. Next, locate the source document (the FASB Statement, EITF Issue, or ASU, for example) that gave rise to the Codification guidance you located. How does the information in this source document confirm, revise, or change your interpretation of the Codification? Explain.