Hi,
When software licences are purchased and there cost of license is paid annually, do we treat this as an asset or as a revenue expenditure?
2 Replies
Krunal Jani
(Article Assistant)
(63 Points)
Replied 03 March 2014
software license is considered as an intangible asset, so cost will be considered as a capital expenditure and it will be amortised over its validity period.
If license is valid only for 1 year and you have to pay the renewal cost every year then amortise entire amount in a year. Or you can also debit the amount in Profit & Loss Account under Indirect Expenses - like computer Maintenence Exp. Either way, the effect will remain same but to debit in P&L A/c. looks better.
siva thunder
(article student)
(253 Points)
Replied 05 March 2014
since fees is to be paid annually the amount paid is to be recognised in that concerned year only
Recent Topics
- Financing for Properties and Businesses
- TAX DEMAND STILL SHOWING ON INCOME TAX PORTAL, EVE
- FORM 10 IEA IN Revised return
- ITC Eligibility on GTA
- Top Highest Tax-Paying Celebrities: FY 2023-24
- Misplace society Bye law
- Submit ommited invoice of previous year
- Need your valueble insight
- GSTR-9 Invoices
- Agricultural Business Loss
Related Threads
CAclubindia
