The Elegant Software Company completed the development and testing of a new software program that provides the ability to transfer data

from among a variety of operating systems. The company believes this product will be quite successful and capitalized all of the costs of

designing, developing, coding, and testing the software. These costs will be amortized over the expected life of the software on a straight$-$line

basis. Was Elegant correct in its treatment of the software development costs? Why?

At the beginning of $2019,$ the Healthy Life Food Company purchased equipment for $$42$ million to be used in the manufacture of a new line of

gourmet frozen foods. The equipment was estimated to have a $10-$year service life and no residual value. The straight$-$line depreciation

method was used to measure depreciation for $2019$ and $2020.$ Late in $2021,$ it became apparent that sales of the new frozen food line were

significantly below expectations. The company decided to continue production for two more years and then discontinue the line. At that time,

the equipment will be sold for minimal scrap values. The controller was asked by the CEO to determine the appropriate treatment of the

change in service life of the equipment. The controller determined that there has been an impairment of value requiring an immediate write$-$

down of the equipment of $$12,900,000.$ The remaining book value would then be depreciated over the equipment's revised service life. The

CEO does not like the controller's conclusion because of the effect it would have on $2021$ income. "Looks like a simple revision in service life

from $10$ years to $5$ years to me so let's go with it that way." What is the difference in before$-$tax income between the CEO's controller's

treatment of the situation and discuss the controller's ethical dilemma.