During the year just ended, HoneyblueCorp. incurred coststo developand produce a routine, low-risk computer softwareproductas follows:

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During the year just ended, Honeyblue Corp. incurred costs to develop and produce a routine, low-risk computer software product as follows:

Completion of detail program design                                               $13,000

Costs incurred for coding and testing to establish technological feasibility                  10,000

Other coding costs after establishing technological feasibility                            24,000

Other testing costs after establishment of technological feasibility                         20,000

Costs of producing product masters for training materials                               15,000

Duplication of computer software and retrainiung materials from product masters (1,000 Units)   25,000

Packaging product (5600 units)                                                     9,000

The guidance pertaining to accounting for the costs of computer software to be sold, leased, or

otherwise marketing applies.

Q#1a. In Honeyblue’s December 31 balance sheet, what amount should be capitalized as software

cost subject to amortization? Explain.

Q#1b. In Honeyblue’s December 31 balance sheet, what amount should be reported in inventory? Explain.

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