IFRS List.com: Software Capitalization / Expensed out

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Software Capitalization / Expensed out

11 November 2009 401 views 3 Comments

Dear IFRS Experts,

Could you please give your opinion on the following:

1. Computer softare is to be considered as Intangible Assets or PPE 2. Which type of computer software can be capitalized / expensed out

Whether following type can be capitalized or expensed out

Photoshop
Illustrator
Adobe Writer
AutoCAD
AutoCAD 3D Max
AutoCAd lite
Server Monitrong Software
Performance & Process Management Application Document Management System Data Cleansing HelpDesk System

IAS -38 states capitalization criteria •it is probable that the future economic benefits that are attributable to the asset will flow to the entity;

In that case a company in normal course of business not related to computer softwares can not have economic benefits from these softwares and should be expensed out.

Thanks in advance

HEMANT

3 Comments »

admin (author) said:

Message from Benaya

I think those software whose license will be renewed or expire after a period of time may be capitalized and amortized accordingly. Those which doesn’t require renewal may be expensed.

Benaya

# 11 November 2009 at 9:38 am

adey786 said:

Which IAS is applicable – Since these softwares can be run on any computer machine therefore these computer softwares should be accounted for under IAS 38. In case if these softwares could not run without using a specific machine then both (machine and software) would have been classified under IAS 16.

These softwares would be classifed as intangible assets if:

- economic benefits can flow to the entity
- cost can be measured reliably

Which items will be capitalised – If cost of above listed items is measurable, these items can be separately identified and future economic benefits will flow (i.e. used in business) then all of these items will be classified as intangible assets.

Intangible assets are required to be amortised over the useful life and also subject to impairtment test anually under IAs 36

Regards

# 12 November 2009 at 1:18 pm