is we purchase any software like installation of MS Windows
do we need to capitalize it or post it under head repair &
maintenance A/c?
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Answer Posted / h.r. sreepada bhagi
Any software purchased needs to be capitalized if it can be
identified as a separate asset. In case it is purchased
along with the computer & the value is inseparable, it can
be added to the cost of the computer, but if it's purchased
subsequently, it needs to be accounted as a separate asset.
However, if it's going to be installed on a particular
computer system, it can be added to the value of that
computer also (Software will become an integral part of that
system).
However, if the value of each software is not exceeding
Rs.5000/-, 100% depreciation can be claimed in the year of
purchase & put to use.
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