Is software a fixed asset?

AndreaMc

Hi All, I'm after some clarification regarding software purchased by a client. The client has purchase solidworks software at a cost of 15k which will be used over many year. Is this a fixed asset?

Thank you

KoopaCooper

If they've purchase it for a one-off cost - rather than a monthly or a yearly subscription - and it will be used over many years, then yes it counts as a fixed asset. Specifically, it would be an intangible fixed asset.

The next question would be how to depreciate this asset - can you dispose of software? (I don't think so?) Is there likely to be any residual value? Would it be sensible to depreciate by a straight-line method or reducing balance? (I personally would probably go with straight-line for software, as I wouldn't be expecting there to be any residual value to play with). Ultimately, you need to decide what you think is the most appropriate method of depreciation though.

Hope I've helped a little.

AndreaMc

Thank you that has helped me a lot.