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Classification & Depreciation Rate

1711 views 4 replies

CMA.Baskar.V

Cost Accountant

400 Points Joined March 2009

In our company we are implemented SAP software and for that implementation we spend lot of amount in different category, for example software purchase, license fee, implementation professional charges including Travel & conveyance paid to implementation team. It's cost around Rs.1.75 cores.

My question is:

1. While capitalizing SAP implementation expenses, under what asset class I need to take (Computer Software / intangible asset)?

2. What depreciation rate applicable as per company act?

Please help anyone and thanks in advance for quick response.

With regards,

Baskar.V

Replies (4)

Ankit CA and CS

Manager - Accounts

204 Points Joined May 2010

I know a company they are showing it under intangible assets - Capitalised software and are amortising it in 5 years on months basis. Rate of Dep as per IT act is 25%.

It is a accepted practice.

CMA.Baskar.V

Cost Accountant

400 Points Joined March 2009

thanks Mr.Ankit,

May I now what basic criteria to classify under intangible asset

Ankit CA and CS

Manager - Accounts

204 Points Joined May 2010

this is a extract of Accounting policy of the comany for fixed asset

Expenditure on software and related implementation costs are capitalised where it is expected to provide enduring economic benefits and are amortised on a straight line basis over a period of five years.