What GL Account should you use when purchasing Computer Software?

Choosing the correct General Ledger account ensures that the University is accurately recording all financial transactions. This flows through and impacts the accuracy of our financial and tax reporting.

GL accounts associated with the purchase of software licenses have been particularly misused/misunderstood.  Due to how software purchases are capitalized (i.e. software purchases over $5,000 before tax), it is important to distinguish between software licenses that are:

• Purchased – Payment for the purchase or development of software with perpetual usage rights/license (i.e. software can be used for an indefinite period of time)
• Licensed/Subscription – periodic payments for renewable software licenses/subscription or maintenance (i.e. permission to use for a period of time on a non-exclusive basis)

To clarify the GL Account selection process, we have renamed the following two GL accounts and provided additional details below.

GL 825200: Computer Software - Perpetual Rights purchase

GL 825201: Computer Software - Renewable License/Subscription/Maintenance

 

Getting Help with Selecting the Most Appropriate Account

To assist in selecting the most appropriate GL account, generate the G/L Account List with Additional Text report to locate a descriptions of each GL account.

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Learn More:

• GTFM Policy: Capital Assets
• Reference Guide: ZRFFMFK02 – G/L Account List with Additional Text

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Last Updated:  May 31, 2024