Software..acc. entry...

How do we account for software.We  have Oracle Database purchased in 2010.Can any one help with accounting entry with amortisation e.g.

Replies (3)

Software can be grouped based on the purpose for which it is purchased...

If it is for use in the business considered as long term asset and charge depreciation and if it is for development of business or upgradation account it as Intangiable assets in the books and have to be amortized over the period of the asset.

For charging depreciation,

Depreciation A/c Dr

   To Accumulated Deperication A/c

For Amortization,

Amortization A/c Dr

   To Accumulated Depreication A/c.

 

           

 

 

Purchase of oracle software - licences - please refer to Accounting Standard 26 issued by ICAI.  This is an intangible asset and should normally be amortised over a period not more than 10 years (unless there is persuasive evidence that the usefil life exceeds 10 years.  In the fixed assets statement, software assets are shown as a separate line item under Intangible Assets.

Software assets a/c - Dr

To Software vendor a/c - Cr

 

For Amoritzation - 

Depreciation / amortization a/c - Dr

To Accumulated depreciation a/c - Cr

 

Thanks.

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