Short Answer Questions Choose and do any two (2) of the following 4 questions. Each is 12.5 points. Total: 25 points. SA1. Expensing versus Capitalizing Companies can capitalize software development costs when the product is "technologically feasible. Some companies never capitalize their software costs-for example, Microsoft. Viderics, a software development company capitalizes those software costs allowed under GAAP The following information is taken from its financial statements. XI X2 X3 X4 Capitalized software costs (in millions): Unamortized balance S40 S50 $63 S96 SI0 S15 SI7 $27 a. If Viderics had not capitalized its software costs but expensed them instead what would they have reported as software expense each year, assuming unamortized balance of software costs was $35 in year X07 b. What is the likely effect upon net income variability of expensing rather than capitalizing software development costs? c. How might income be manipulated under either of these two methods (expensing and capitalizing)