IFRS Web site upgradation considered as Intangible assets

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Bhaskar (Querist)
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23 July 2008 wether investement on upgrading web site of organisation will be intangible asset & how it will be treated
please elobrate

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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24 July 2008 Ongoing costs of updating or adding to the information on a website are of a revenue nature, and are deductible when incurred. It is a matter of degree as to whether expenditure is updating and maintaining a web site, and hence revenue, or a reconstruction or functional improvement to a website, which would be capital.
However, some examples can be given as to the distinction between the two categories in the context of websites.

Maintenance of a website would include the following:

Updating the content of a web page
Adding content to a web page
Correcting minor errors or bugs in a website, and
Minor style or format changes relating to matters such as font types, font sizes, colours and so on.
An upgrade of a website would include the following:

Adding new features to a website, such as adding a sales capability with credit card processing features
Adding extra pages to the website
Upgrading the version of the software used in the website, and
Completely changing the layout and functions of the website sufficient to be a reconstruction.