Choice "D" is correct. The software maintenance costs are expensed, and the software modification costs are capitalized and amortized using the straight line method over five years. Thus, the total expense that Alpha should recognize related to the maintenance agreement and the software modifications for the year ended December 31, Year 1, will be an expense related to the software maintenance cost in the amount of $12,500 ($15,000 ÷ 12$1,250 per month × 10 months) plus amortization expense of $1,000 ($5,000 ÷ 5 years$1,000 per year).Choice "c" is incorrect. The software modification costs must be capitalized and amortized using the straight line method over a five year period. Additionally, the software maintenance costs only associated with Year 1 will be expensed in Year 1.Choice "a" is incorrect. The entire amount of software maintenance costs ($15,000) cannot be expensed in Year 1 because the maintenance period begins on March 1. Total expense related to the maintenance agreement and the software modifications for the year ended December 31, Year 1, will include the amortization expense of $1,000 and 10 months of expense related to the software maintenance contract, which is $12,500 and not the entire expense of $15,000.Choice "b" is incorrect. All of the software maintenance expenses and software modification costs ($20,000) cannot be expensed in Year 1. Only 10 months of software maintenance costs can be taken in Year 1, since the maintenance period began on March 1; one year of amortization expense can be taken in Year 1 on the software modification costs.