Problem: Early in 2024, the Excalibur Company began developing a new software package to be marketed. The project was completed in December 2024 at a cost of $72 million. Of this amount, $48 million was spent before technological feasibility was established. Excalibur expects a useful life of five years for the new product with total revenues of $120 million. During 2025, revenue of $36 million was recognized.
Required:
1. Prepare a journal entry to record the 2024 development costs.
2. Calculate the required amortization for 2025.
3. Determine the amount to report for the computer software costs in the December 31, 2025, balance sheet.