Terra Corp.purchased a new enterprise software system and incurred the following costs: What is Terra Corp.'s basis in the software system?

Question

Terra Corp.purchased a new enterprise software system and incurred the following costs:  What is Terra Corp.'s basis in the software system?

Quizplus · Accepted Answer

The basis of the software system would include the purchase price of $800,000 plus any additional costs incurred to get the system up and running. Here, there is an installation cost of $20,000 and a training cost of $5,000, which brings the total basis of the software system to $825,000. Therefore, the correct answer is D)$820,000.