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How to book purchase of new software of rs. 1 lac?

vinayak c. chavan (CPT passed) (1011 Points)

13 August 2014

We are private limited company ooperating in Mumbai (India). We have purchased an electronic software for Rs.1 Lakh from company operating its busines from Germany. How should I book this in books of account? Should I treat it as Fixed asset or Treat it as expnses?

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4 Replies

Pakshal Shah (Practicing Chartered Accountant) (271 Points)
Replied 13 August 2014

Intangible Fixed Asset

(Guest)

Yes ,Under Revised Schedule VI ,Software is to be shown under Intangible assets.

CA Rahul Agrawal (Deputy Manager) (81 Points)
Replied 14 August 2014

The same should be booked as software and to be shown as Intangible Assets.

Ashish Tewani (CA Final Article at V.P. Mehta & Co.) (83 Points)
Replied 20 August 2014

It is an expense the benefit of which will be derived to you over many years or until its license expires. So booking the whole expense in current financial year is incorrect, as its benefit extends to more than current year. Correct step is to treat it as Intangible Fixed Asset. At the end of year, you will charge depreciation @ 25 % under Income Tax Act, 1961. While booking under Intangible Fixed Assets, don't forget to add all charges or duties paid by you (in acquiring it) to its cost.