Question - Karen Austin Corporation has capitalized software costs of $897,500, and sales of this product the first year totaled $432,660. Karen Austin anticipates earning $1,009,540 in additional future revenues from this product, which is estimated to have an economic life of 5 years. Compute the amount of software cost amortization for the first year.
(a) Compute the amount of software cost amortization for the first year using the percent of revenue approach.
(b) Compute the amount of software cost amortization for the first year using the straight-line approach.