Capitalization of SoftwareFIN-ACC-I-160
Application software shall be capitalized as a separate asset if the acquisition value is Five Thousand Dollars ($5,000) or more and has a useful life expectancy of greater than one year.
Operating software purchased with a computer package will be capitalized as part of the initial cost of the computer.
Reason for Policy
To define what items will be classified as capital software.
For software to be secured as capital, the correct object code should be utilized on the purchase order and other financial transactions. A list of the current object codes (income and expense classes) is available by contacting your Campus Chart Manager (see listing; http://www.fms.indiana.edu/fia/coaman.asp/) or the Financial Information System object code reference tables.
Application Software: Canned programs that offer special functions, i.e. Harvard Graphics, LAN based user packages.
Computer Package: Is a purchase of the main computer central processing unit and could include a monitor, keyboard, and mouse.
The source to this policy is:
American Institute of Certified Public Accountants (AICPA) Guidelines for Colleges and Universities, GAAP