Please note: This is an archived version of the policy. For a listing of current policies in effect, please select from the policy subcategories listed on our homepage.

Indiana University Seal

Capitalization of SoftwareFIN-ACC-I-160



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Policy Statement

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.

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Reason for Policy

To define what items will be classified as capital software.

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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; or the Financial Information System object code reference tables.

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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.

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The source to this policy is:

American Institute of Certified Public Accountants (AICPA) Guidelines for Colleges and Universities, GAAP

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