As per AS 10 software which is not an integral part of computer should be classified as an intangible asset and amortised under AS 26. Now where a company which classified tally software as computer in earlier years and provided depreciation thereon, now wants to treat tally software purchsed during the year as an intangible asset. Is it permissibile to apply this accounting treatment prospectively and not retrospectively? Will it not amount to change in accounting policy?
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accounting of software
Replies (3)
actually its the question of prior period errors the co. has made error by treating accounting softwere as integral part of computer acually we can say that only operating softwere are the integral part of softwere not as tally it should be considered as intengible asset only. So, its not the question of changes in accounting policy its the question of AS 5 and as pe AS 5; the the prior period errors should be disclosed and effect should be rectified. So, the ammortisation should be calculated as per retrospective effect and total ammortisation to be provided and total depreciation provided should be compared and difference should be transferred to P/L Account.
Yes it is change in accounting policy. But is the amount material to disclose via a note to accounts?
Akshat can you provide me the basis for calculating depreciation on tally?
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