Capital or Revenue Expenditure

Shamita (Learner) (410 Points)

02 October 2009

Our Company has spent about Rs. 50,000 on ERP software. Should we capitalise it or treat it as revenue expenditure?

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3 Replies

(Guest)

if it is giving long term benefit then u should capatalise it and treated as capital expenditure.if not then treat like a revenue expenditure.

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machender (student) (190 Points)
Replied 03 October 2009

Dear Shamita,

if the usage of ERP package is having enduring benefit of more than one financial year

then it should be capitalised otherwise, it has to be charged to profit and loss account.

in my opinion, normally ERP packages can be used for more than one year so, it should be capitlised.

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Max Payne (~) (26 Points)
Replied 03 October 2009

Yes what Machender wrote is correct, after you capitalise amortize it over the estimated useful life.

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