USEFUL LIFE OF COMPUTER SOFTWARE

[P.C. SONI & CO. .]

Respected Professionals,

Kindly advice me regarding the query mentioned as under :-

One of my client has installed SAP software worth Rs.500000/-, in this regard I want to know as per Companies Act 2013 what will be the useful life of SAP software.

 

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Best Regards,
For P. C. Soni & Co.
( Chartered Accountants )
844 Marshall House
33/1 N. S. Road
Near Central Bank of India
Area : Dalhousie
Kolkata - 700001
Ph : 033 - 22133045 / 32911768 / 40602468

[Sudip Ghosh]

Dear Colleague,

Useful life of SAP software depends as well as varies on the following criteria.

1. Application of the software;

2. AMC with the software developer company for maintenance and support for such software; and

3. Frequency of up-gradation (change of version) of the software.

Subject to the above mentioned criteria, in my opinion useful life of SAP varies between ten and fifteen years.

CA. Sudip Ghosh

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[Ankit Varma]

It will be amortised as per AS 26.

Please refer Paragraphs 63-80 of AS 26.

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Regards

CA Ankit Varma

A VARMA & ASSOCIATES
Mahalaya Road
Dibrugarh
Assam

Ph: +919401998228
      +919706703516

[akhilesh chandra thakur]

Dear Sir,

Useful Life of "Software, Server & IT networks" is 6 years as per schedule-II of Companies Act,2013. 

It is to be further noted that in case of SAP (i.e. Softwares) residual value would be Nil and hence full 100% software cost is depreciable over useful life of 6 years.

Best Regards,

CA Akhilesh Chandra Thakur

Deputy Manager-F&A

Jindal Power Limited

Vill & PO: Tamnar, Tehsil : Tamnar

Dist: Raigarh – 496 108 Chhattisgarh

M 07583803622

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[Shambhu Agarwal]

SAP Software is intangible in nature and companies act 2013 does not provide the life of intangible assets.

Regards,

CA Shambhu Agarwal

[Ankit Varma]

It talks about only Servers and Networks, not softwares.

[Ashok Kumar Agarwal]

SIR

SCHEDULE II SPEAKS ABOUT SERVERS & NETWORK.  IT DOES NOT INCLUDE SOFTWARE.

IN MY OPINION SOFTWARE BEING INTANGIBLE ASSET, IT SHOULD BE AMMOTTISED OVER ITS USEFUL LIFE AS SPECIFIED BY VENDOR OR ESTEMATED BY MANAGEMENT

 

CA. Ashok Kumar Agarwal

Jagdish Ashok & Co

Chartered Accountants

304, Elgin Chambers

1-A Ashutosh Mukherjee Road

Kolkata- 700 020

Mobile: +91 98305 02410

NOTE :

A STEP TO SAVE OUR ENVIRONMENT FOR NEXT GENERATION : THINK BEFORE PRINTING THIS MAIL.

[Deepak Rathore]

PARA 13-15 of AS -26

Amortisation period 

13. The depreciable amount of a software should be allocated on a systematic basis over the best estimate of its useful life. The amortisation should commence when the software is available for use. 

14. As per this Standard, there is a rebuttable presumption that the useful life of an intangible asset will not exceed ten years from the date when the asset is available for use. However, given the history of rapid changes in technology, computer software is susceptible to technological obsolescence. Therefore, it is likely that useful life of the software will be much shorter, say 3 to 5 years. Amortisation method 

15. The amortisation method used should reflect the pattern in which the software's economic benefits are consumed by the enterprise. If that pattern can not be determined reliably, the straight-line method should be used. 466 AS 26 The amortisation charge for each period should be recognised as an expenditure unless another Accounting Standard permits or requires it to be included in the carrying amount of another asset. For example, the amortisation of a software used in a production process is included in the carrying amount of inventories.

[Sanjay Agarwal PO Accounts]

As per Schedule II of Companies Act,2013, for intangible assets, the provisions of the accounting standard applicable for the time being in force shall apply.

In view of above, AS 26 will be applicable for software and as per the AS 26, useful life of software can be considered between 3-5 years.

Regards

Sanjay Agarwal 

On Tue, Jul 14, 2015 at 11:24 AM, 'Ashok Kumar Agarwal' via forum4ca <foru...@googlegroups.com> wrote:

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Regards
Sanjay Kr. Agarwal
M/s Birla Corporation Ltd

9/1 R N Mukherjee Road

Kolkata-700001

Contact No: (033) 66166742