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How much of the R-D and production costs will be expensed

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Reference no: EM132913305

Question - The following costs were incurred by A Company in 2019 in the process of designing, developing and producing a new software program using a certain technology:

Designing and planning - P720,000

Code development - P1,080,000

Testing - P360,000

Production of product masters - P1,800,000

In 2020, the Company incurred P720,000 to produce the program for sale in 2020. The costs of designing and planning, code development and testing were all incurred before technological feasibility was established. Company A began to market the software program in 2020 and earned revenues of P1,728,000 in 2020. The company estimates that total revenues over the 4 year life of the product will be P8,640,000.

At the end of 2020, the Company was offered P2,880,000 for the rights to distribute the software.

How much of the R&D and production costs will be expensed in 2020?

Reference no: EM132913305

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