[Serhii]

Hellow!

Please, help with the following situation.


A bank "ABC" uses an accounting software provided by a developer "XYZ". The software is owned by XYZ and the bank pays monthly rental payments for access to the software. Rental agreements are usually concluded for one year; new agreement is concluded at the end of each year.


Recently, the bank required special modules to be developed. Price of each module is material (roughly 1/2 of the annual rental payment amount).
Modules are developed only for ABC, and the bank will buy licenses for them. Therefore, ABC is going to treat these modules as its own intangible assets. Currently, ABC doesn't have an accounting policy for such intangible assets.


What useful life ABC should accept for these intangible assets? A license for each module is lifetime.
Should ABC estimate the period for which modules will be in use?
Will be the useful life decision affected by the fact that modules can be used only with the software not owned by the ABC (de jure, bank has no guarantee that XYZ will provide access to the software after the annual period)?


Accounting is under IFRS.

[ma0641]

"Please, help with the following situation." I assume you mean DO this for me.We help you after you do the work and will clarify areas where you are having problems but will not do the work for you.

[paraclete]

The useful life of software is very short irrespective of the facts. The bank may decide to redevelop the software at any time rendering the software useless or the developer may decide not to continue the relationship. Developing the modules should have been undertaken for fee by the developer and not developed without specific contract for future income. In my opinion the software should not be held as an asset for more than one trading period