Tycon is a machine manufacturer and has a 31 December year end. The Lenis model is one of many models of machineries that it carries. Tycon spent significantly on research and development. The research and development costs of the Lenis model were $500,000 and $1,600,000 respectively. The development costs of the Lenis model are amortised on a straight-line basis over 10 years with zero residual value, starting from 1 January 2011.

The model has been facing intense competition in recent years from competitors offering value-for-money alternative models. By 31 December 2016, the management of Tycon re-assessed its Lenis model and concluded that the model will have reached the end of its economic useful life in two years’ time. The recoverable amount of the model is estimated to be $160,000 as at 31 December 2016.

Required

(i) For the financial year ended 31 December 2016, identify the relevant accounting issues relating to the development costs of the model and prepare the necessary journal entries where applicable.

(ii) Calculate the amortisation expense of the development costs of the model for the next two financial years after 31 December 2016.