Software

Code: 1232
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Account Information

Account Type Statement of Financial Position
Normal Balance Debit

Definition

Cost of software and computer systems used in operations

Common Journal Entries

Purchased accounting software

Dr. Software
Cr. Bank Account

Recorded software amortization

Dr. Amortization Expense
Cr. Accumulated Amortization Software

Internally developed software capitalized

Dr. Software
Cr. Development Costs

Written off obsolete software

Dr. Write-off Expense
Cr. Software

International Accounting Standards

IFRS IAS 38 Intangible Assets

Capitalised if meets recognition criteria. Amortised over useful life. No revaluation unless active market.

US GAAP ASC 350 Intangibles - Goodwill and Other

Internally developed software costs expensed until technological feasibility, then capitalised.

⚠ Key Difference: IFRS vs GAAP

IFRS capitalises development costs earlier; GAAP delays until feasibility