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Please explain the answer to the problem by comparing the amount spent on software development costs each year to the amount of amortization expense reported
Please explain the answer to the problem by comparing the amount spent on software development costs each year to the amount of amortization expense reported on the income statement each year, for both the 3 year estimated economic life and the 4 year estimated economic life. Please explain how you arrived at your calculations.
Requirement 3. Hydrologic Corporation included $1.519 million of software as an asset on its 2011 balance sheet. The notes indicated that "Software development costs incurred subsequent to establishing technological feasibility through general release of the software products are capitalized. Technological feasibility is demonstrated by the completion of a detailed program design. Capitalized costs are amortized on a straight-line basis over the economic lives of the related products, generally three years." Suppose that Hydrologic spent the same amount on this activity every year but had always used an estimated economic life of 4 years rather than 3 years. How would the income statement and balance sheet differ if the life had always been 4 years rather than 3Step by Step Solution
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