Accounting treatment of a software in on going project

This query is : Resolved

shailesh (Querist)
Follow

13 December 2013 a power generating company had purchased a software in the year 2012 for it's new project. project will be completed on June 2014 but the software is being in use already and also it will be used after the commissioning of project. after incurring all the necessary expenditures the cost of project will be capitalized. what is the accounting treatment of that software at the time pf purchase and at the time of capitalization of the new project. after the commissioning of new project it will become a separate identity.

CA Sanjeev Kumar

CA Sanjeev Kumar (Expert)
Follow

13 December 2013 In the above, you have not stated about the project as in much details, perhaps, as far as concerned about the software, the cost of software need to be recognized as intangible assets under AS-26 read with the AS-1, irrespective of the completion of the project. However, if that software can not be used after the completion of the project then it can added to the assets as per AS-10. Further, the detailed notes to account need to be shown in the books of a/c.

thanks

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now