Hi All. Earlier perpetual software licenses were treated as operational expenses and their expenses were amortized over lifetime of the license ( Generally 4 years ).
But this financial year it is treated as capital expense and the expenses are capitalized and depreciation is being booked.
Is there's any change in Accounting standard because of which it is being done.
Menu
Treatment of perpetual license expenses
Replies (1)
I’m not sure. Intangible assets is still following the same method of accounting treatment related to finite and indefinite intangible assets.
Finite assets= Amortised for their useful life
Indefinite life assets= Cash will be generated perpetually, it will NOT be amortised, instead, it will be tested for impairment annually. If there is impairment, the reduction will be credited to the asset, while, when there is a revaluation gain, the gain is recognised in profit and loss.
Intangible assets like licenses are never depreciated.
Recent Threads
- Help for GST Return
- Eway bill correction
- How to show buyback share income?
- Department Audit under GST
- Replacement of machine
- Bug in ITR-2, Schedule TDS, Sub-section TDS-3 (TDS
- Advertisement exps
- GSTR 1 - Old B2c invoice amend in B2B
- Clarification Regarding TDS on Parking Charges
- Serial number of invoices raised
Related Threads
CAclubindia
