Wallach Inc. has capitalized computer software costs of $7,200,000 on its new "Trenton" software package. Revenues from 2014 (first year) sales are $4,000,000. Additional future revenues from "Trenton" for the remainder of its economic life, through 2018, are estimated to be $20,000,000.
Instructions
(a) What method or methods of amortization are to be applied in the write-off of capitalized computer software costs?
(b) Compute the amount of amortization for 2014 for "Trenton."