DEPRECIATION ON INTANGIBLE ASSETS

Assets Under Development: No depreciation can be claimed until the software is fully developed and placed into active business use.

Classification: While the software is under development, the costs should be capitalized.

Operational Software: Once put to use, software is generally categorized as an intangible asset (or as part of the computer block, depending on the nature of the software) and is eligible for depreciation at the prescribed rates (typically 25% for general intangible assets or 40% if classified under the computer block).