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Capitalization of software license

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(Querist)
20 February 2022 The Company has entered into a 5-year contract for use of software. The Cost for the same is Rs. 10 crores.

But the payment will be made in equal instalments over 5 years.

Whether the company can capitalize the cost of Rs. 10 crores in 1st year and amortize the same in 5 years?
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CA R SEETHARAMAN

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CA R SEETHARAMAN (Expert)
20 February 2022 No need for capitalisation as payment is made in equal installments.
Charge it on payment yearly.

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