IFRS treatment of software upgrades

Discussion in 'Technical Queries' started by Damon111, Nov 27, 2016.

  1. Damon111


    Apr 3, 2013
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    I was curious what IFRS's policy was on certain matters, specifically, upgrades.

    Here are the following cases that I see at my company. If you are able to site the specific section in IFRS in responses, that would be great.

    My company has capitalized perpetual software licenses. Are upgrades to this software capitalize -able?

    What determines if an upgrade to a tangible asset is capitalized?

    Now, for a more unique situation. Like many offices, we have office phones and related equipment and software to operate those phones (all from the same vendor). We recently made a large payment to the vendor for a comprehensive update to the phones, equipment and software. It's a package deal so I cannot really split the payment between software and the equipment. What would determine it this update payment should be capitalized?

    Damon111, Nov 27, 2016
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  2. Damon111

    Fidget VIP Member

    Jan 6, 2013
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    When it comes to further spending on non current assets, the rule of thumb is that if the expenditure in some way enhances the asset, for example, will generate increased sales or extend its useful life, then it can be capitalised. If not, then it should be expensed.
    Fidget, Nov 28, 2016
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