Save Rs 499 on a 2-Year Ad-Free CAclubindia Pro Membership. Subscribe Now!

Purchase of ERP software

373 views

Save Share

Join Us Follow Us Add as Source

Murad

Accountant

24 Points Posted on 30 March 2020

Hi, Appreciate if someone could help me on this.

Lets say a client has ordered a specialized software costing $1,500. As of the year end, software has not been delivered yet and client has made an advance payment of $1,000.

The only entry made in regard of this transaction is recording of advance payment.

My question is whether we need to accrue the remaining amount of $500 in the books at the year end?.

Thank you.

Replies (3)

Quick Summary

This discussion addresses the accounting treatment for a specialised ERP software purchase where an advance payment has been made, but the software is yet to be delivered by year-end. The core question is whether to accrue the remaining balance. The consensus is that the entire expense should be accounted for, with the software debited. Upon successful implementation, it can then be capitalised.