Should Software Be Capitalized?

While software is not physical or tangible in the traditional sense, accounting rules allow businesses to capitalize software as if it were a tangible asset. Software that is purchased by a firm that meets certain criteria can be treated as if it were property, plant, & equipment (PP&E).

Is software a capital asset?

Computer Software. Computer software is the most widely owned type of intangible capital asset.

Should software support be capitalized or expensed?

If the software price includes maintenance, support, or training, these costs must be separated and expensed. If these costs cannot be reasonably separated, the software costs must be expensed in their entirety.