Capitalisation of Software update's on Server

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 June 2011 Dear,

we have purchased Data Warehousing server from an external Vendor. We will be storing our database on this server.

Vendor will be charging for Software updates on server as well as Product Support for one year.

for e.g. Data Warehousing Server - Rs 5 Lacs, Software Updates from 1st April 11 to 31st March 12 - Rs 2 lacs , Product Support from 1st April 11 to 31st March 12 - Rs 1 Lacs.

I believe that Data Warehousing Server, Software updates need to be capitalised whereas product support need to be amortised as expenditure.

For Software update's it's one time but if new features comes it will be updated on routine basis and post March 12 additional charges will be taken

Kindly confirm what need's to be capitalised and what not.

CA Sumat Singhal

CA Sumat Singhal (Expert)
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07 June 2011 Yes u think right..software updates enhance the standard performance beyond to its previous assessed ...so it will be capitalised where as product support may be charged as an expenses...

CA Sumat Singhal

CA Sumat Singhal (Expert)
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