[hema11111]

Is Computer software a fixed asset?

[morgaine300]

Yes. Basically a fixed asset is an asset that is tangible and that you will use in your business for more than one year. It doesn't include stuff that was purchased to re-sell (inventory) nor things that you're using as an investment. There's some technicalities to it, but for the most part something tangible that you'll use for over a year (computer stuff, equipment, buildings, cars, etc) are fixed assets.

[ROLCAM]

In my mind Computer Software is an
Office Expense.
Computer Software does not need to be Capitalized.

[morgaine300]

I only now realize I misread what it said. I expect I read that as "computer hardware" - doh!

Yes, software is expensed.

[rehmanvohra]

I have a different view than morgaine300 and rollcam. If the computer software meets the criteria of an intangible asset that it is an asset. According to IAS38 (Intangible Assets) and intangible asset is:
* an identifiable
* non monetary
* asset
* without physical existence

According to the Framework for the preparation and presentation of financial statements, an asset is:
- a resource
- controlled by an entity
-as a result of past events; and
- from which future economic benefits are expected to flow to the entity.

The last point about future economic benefits is important.

What would you do with a computer software which came along with the purchase of the computer?

What would you do with a computer software purchased as stand alone, say Oracle Financials?

[HBowen]

It also depends on the cost. If it's just a Quickbooks Program then yes just an expense.

[morgaine300]

I have a different view than morgaine300 and rollcam. If the computer software meets the criteria of an intangible asset that it is an asset. According to IAS38 (Intangible Assets) and intangible asset is:
* an identifiable
* non monetary
* asset
* without physical existence

According to the Framework for the preparation and presentation of financial statements, an asset is:
- a resource
- controlled by an entity
-as a result of past events; and
- from which future economic benefits are expected to flow to the entity.

The last point about future economic benefits is important.

What would you do with a computer software which came along with the purchase of the computer?

What would you do with a computer software purchased as stand alone, say Oracle Financials?

You sure do get complicated a lot.

[rehmanvohra]

You sure do get complicated a lot.

What is so complicated about it?

[morgaine300]

What is so complicated about it?

The fact that an average person doesn't have a clue what you're talking about. Everyone isn't an accounting major and can't get that technical.

[rehmanvohra]

The fact that an average person doesn't have a clue what you're talking about. Everyone isn't an accounting major and can't get that technical.

When I answer to questions it is my intention that a proper education is provided. It is a two way street. I may not be as experienced as you but I believe in what I do for the benefit of the readers.

You may have read so many books on accounting and I am sure most if not all authors may have referred to the nature and content of computer software.

If your contention is accepted about not getting too much technical, then an entity that purchases oracle financials software spending a great deal of money would just expense it? Do you think the auditors will accept this? Do you think that IRS will accept this?

I have a feeling that you d o not like to be criticised. This is not the first time. Why can you not accept constructive criticism?

[morgaine300]

I did not take it as any kind of criticism. You have decided to assume that. I said "You sure do get complicated." Then I said "not everyone is an accounting major..." so you think I was talking about me and Rolcam when I said that? I was thinking about the OP, not me.

I was referring to your quoting of technical statements that your average person is never going to understand. (Didn't I already say that?) If your intent is to educate, then talk plain English. You talk technical mumbo-jumbo, even to first-year students, who don't understand, and quite frankly, probably don't care. It's like a lawyer talking legalese to your average joe.

For your information, I happen to agree with you. For something expensive, yes it would be an asset and not expensed. Someone else did say it would depend on the cost. Since I've mostly worked for little tiny companies that buy cheapo software that would be expensed, no, it didn't happen to occur to me until you brought it up. But why not say it in plain English? That's what I'm talking about.

Just as a note... nothing in anything you quoted would tell someone that the cost of the software might have anything to do with it.

[morgaine300]

Actually, if we want to complicate this further, what about software that is just licensed to a company and is renewable on an annual basis?

[Cheryl Mckenzie]

Do I capitalize the purchase of an upgrade to an existing computer software

[JamesJacob]

When I answer to questions it is my intention that a proper education is provided. It is a two way street. I may not be as experienced as you but I believe in what I do for the benefit of the readers.

You may have read so many books on accounting and I am sure most if not all authors may have referred to the nature and content of computer software.

If your contention is accepted about not getting too much technical, then an entity that purchases oracle financials software spending a great deal of money would just expense it? Do you think the auditors will accept this? Do you think that IRS will accept this?

I have a feeling that you d o not like to be criticised. This is not the first time. Why can you not accept constructive criticism?

I do agree with your explanations. It makes sense.

[umickismith]

Computer software is a technology-based intangible asset.