Choice "B" is correct. For software developed internally, costs incurred in the preliminary project stage are expensed under U.S. GAAP. In this question, the costs AFTER the preliminary project stage are capitalized and depreciated over the economic life of the product (3 years). Depreciation expense is thus $3,333,333. The 5-year life of the equipment on which the package will be used is a distracter.
Choice "a" is incorrect. In this question, the $10,000,000 of cost is after the preliminary project stage. This cost will be capitalized and depreciated. Thus, depreciation expense is other than $0.
Choice "d" is incorrect. In this question, the software is depreciated over 3 years, not 5 years. The 5-year life of the equipment on which the package will be used is a distracter.
Choice "c" is incorrect. The full $10,000,000 cost would not be expensed in the first year unless the costs were incurred during the preliminary project stage. In this question, the cost was incurred AFTER the preliminary project stage.