Hi,
A company has just upgraded its Tally Software from 7.2 to 9.2.
Should they capitalise this cost or take it as Computer expenses.
Cost- Rs.6300
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Tally Installation Expense
Replies (6)
We have to capitalise the cost as the productive capacity increases.
As per my knowledge, it should be charged off to revenue. Though upgradation increases productibity, as claimed by Sudhakar, we cannot capitalise.
Any Sec. on this Case?
What should i do-Capitalise or Charge to revenue?
INCOME TAX DOES NOT DEFINED CAP. OR REV EXPENDITURE. SINCE THESE EXPENSE ARE INCURRED AGAIN AND AGAIN AND YEAR TO YEAR AS NEED TO UPGRADE THESE ARE REVENUE EXPENDITURE.
Such expenses can be capitalised depending upon the cost (i.e materiality), accounting policy of the company, enduring benefits and such other equal factors. Either which way, in my opinion, taking into consideration the amount of expenditure, it can be charged to revenue, despite it results in enduring benefit.
In my view, the Benefit received from that updation will be long term. so, it is good to CAPITALISE the cost.
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