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Accounting treatment for sap licences

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Querist : Anonymous

Querist : Anonymous (Querist)

31 December 2015 My company bought new 20 SAP licences for new users. This is in addition to existing 13 licences. What is the correct accounting treatment for this and what are the things to be considered?

These Licences are one time expenses and after this we need to pay AMC only on yearly basis

Amol S Joglekar

Amol S Joglekar (Expert)

31 December 2015 these are normally on yearly basis. The fees are to be paid per year. And in that case, you can treat it as revenue expenditure.
In some cases, the charges are linked to usage. In that case the entry will be passed once the usage is made available to us. Till that time the payment shall be kept in advance account.

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