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Capitalisation of user license purchased

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Querist : Anonymous

Querist : Anonymous (Querist)

09 July 2013 Hi,

My company has purchased new ERP software. It contains user license and installation componant. The vendor bill has come in two parts.
- User license
- Installation

Please suggest me the accounting treatment whether the user license needs to be capitalised.

Thanks

Poonam

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

12 July 2013 Software cost and installation can be capitalised. and user license please check the validity, in case license is annual renewal then you can treat the licence amount as prepaid and charge off the whole year. if it is life time license then you can add to software cost and capitalise

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