in General Principles by
Dear All,


If a company implements SAP system should they classify all of the costs related to this implementation as intangible asset? I mean, there are also costs regarding external and internal consultants working hours as well as the employees' business trips (from other entities to the entity performing implementation). I'm not sure which part of the expenses should be recognized as addition to asset value, and which part not.


Thank you for any help here.

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1 Answer

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by Level 5 Member (29.1k points)
The costs associated with implementing an SAP system can be classified as either capital expenditures or operating expenses. Capital expenditures, such as the costs of purchasing and installing the software, are typically recognized as intangible assets on the balance sheet. Operating expenses, such as the costs of consulting services and employee business travel, are typically expensed in the period in which they are incurred. It's important to note that the classification of costs as either capital expenditures or operating expenses is determined by accounting rules and guidelines, and specific treatment may vary based on the accounting framework being used (e.g. IFRS, US GAAP). It's recommended to consult with a qualified accountant or auditor to ensure that the costs are properly classified and recorded in accordance with accounting standards.

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