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Blue Spruce Ltd. decided that it needed to update its computer programs for its supplier relationships. It purchased an off-the-shelf program and modified it internally to link it to Blue Spruce' other programs.
The following costs may be relevant to the accounting for the new software:
Original cost of old software $10,700
Accumulated amortization of old software 8,560
Purchase price of new software 7,400
Training costs 3,600
General and administrative costs 2,270
Direct cost of in-house programmer's time spent on modifying software 1,440
Problem 1: Prepare journal entry to record the software replacement.
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