Depreciation
This query is : Resolved
19 May 2014
Please tell me dat d tally software purchased by a partnership firm will b treated as an asset or as revenue expenditure?? Wat wll b accountng treatement fr ds?? Plz reply
19 May 2014
should normally be accounted for as a revenue expenditure. if you have paid for 2-3 years license, then account for unsed period as prepaid expense.
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19 May 2014
Thank you sir for replying... But my Chartered is saying that this will be considered as an Intangible asset and so charging depreciation @ 25% for financial year 2013-2014. How can I convince him to record such tally purchase as a revenue expenditure.. Please help and provide some link or quote the relevant section which clearly says the correct treatment of such entry.. Please
19 May 2014
lets say you buy tally for three years licence..ok...now ask your CA, how will 25% depreciation apply in this case, if the product itself wont be available for use after 3 years!
19 May 2014
I have asked him all the questions relating to this matter but still he is not agreeing with me to treat the same as a revenue expenditure.. Please help me in finding a proof like any circular or any amendment or the relevant section so that I can prove my point easily.. Please
19 May 2014
well the books of accounts are the prerogative of management. I would advise you to frame a accounting policy of recognizing such expenses. let the CA qualify his report if he wishes to. He will have to qualify on the basis of established norms..let him state his reasoning. Why are you worried about what CA thinks....he should be doing the research, not you.
19 May 2014
Ok sir.. Thanks for replying and solving my query.
19 May 2014
Hello
I differ in opinion.
With due respect to mr kaushik sir, I believe that it can be taken as a fixed asset. If the client has procured a licensed version then it is not like you will not be able to use the software after the license term is over. In fact you can use it as long as you want to use or untill the software itself is outdated. (after the license term you can still use it as you want only thing is you will not be provided with the updates in the software)
Regards
I differ in opinion.
With due respect to mr kaushik sir, I believe that it can be taken as a fixed asset. If the client has procured a licensed version then it is not like you will not be able to use the software after the license term is over. In fact you can use it as long as you want to use or untill the software itself is outdated. (after the license term you can still use it as you want only thing is you will not be provided with the updates in the software)
Regards
19 May 2014
Sorry Kedar...tally works in a different manner...once the licence is gone, major functionalities are gone...
19 May 2014
why? we can use the software only updates are not availible we can steel use it.
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