Capex? Cloud based software license paid monthly

Is this capex??

Didn't find your answer?

I have a cloud based Oracle License fee which is billed monthly £9k for 33 months. My question is, is this capex and if so, is it an intangible asset or PPE?

I have searched and searched and because it is cloud based licensing I am really not sure the accounting treatment for this cost! 

Thanks in advance

Replies (4)

Please login or register to join the discussion.

blue sheep
By NH
03rd Aug 2019 09:36

What are you paying for? An Asset or an ongoing licence? I had one of these recently that happened to be with a client subject to an audit - there was a choice on how to pay for the software a one off hit of 50k (which the auditors suggested would be P&M) or a monthly licence fee which they were happy to treat as a lease cost.
If the cost of the software is 300k that you just happen to be paying on a finance arrangement over 3 years thats one thing, but if you are paying a monthly licence fee thats another.

Thanks (0)
avatar
By kelliemann89
03rd Aug 2019 09:59

It’s a license fee for implementation and supply of oracle cloud software. Instead of paying a lump sum we are paying for it every month on a finance agreement with societe generale. Would you class this is a leasing cost?

Thanks (0)
blue sheep
By NH
03rd Aug 2019 10:17

How long does the license last for?

Thanks (0)
avatar
By kelliemann89
03rd Aug 2019 12:24

It’s an on going license for new accounting software but the payment is across 33 months instead of one large instalment.

Thanks (0)