Capitalisation of Software update's on Server
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
16 June 2011
Dear,
we have purchased Data Warehousing server from an external Vendor. We will be storing our database on this server.
Vendor will be charging for Software updates on server as well as Product Support for one year.
for e.g. Data Warehousing Server - Rs. 5 Lacs, Software Updates from 1st April 11 to 31st March 12 - Rs. 2 lacs , Product Support from 1st April 11 to 31st March 12 - Rs. 1 Lacs.
I believe that Data Warehousing Server, Software updates need to be capitalised whereas product support need to be amortised as expenditure.
For Software update's it's one time but if new features comes it will be updated on routine basis and post March 12 additional charges will be taken
Kindly confirm what need's to be capitalised and what not.
we have purchased Data Warehousing server from an external Vendor. We will be storing our database on this server.
Vendor will be charging for Software updates on server as well as Product Support for one year.
for e.g. Data Warehousing Server - Rs. 5 Lacs, Software Updates from 1st April 11 to 31st March 12 - Rs. 2 lacs , Product Support from 1st April 11 to 31st March 12 - Rs. 1 Lacs.
I believe that Data Warehousing Server, Software updates need to be capitalised whereas product support need to be amortised as expenditure.
For Software update's it's one time but if new features comes it will be updated on routine basis and post March 12 additional charges will be taken
Kindly confirm what need's to be capitalised and what not.
16 June 2011
Initial expenditure can be capitalized. Subsequent upgradation charges can be expensed out in the year of payment itself.
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