Is Software A Current Asset Or A Non-Current Asset?
In today’s growing world software is essential for every business to operate smoothly. Software helps a business to record data easily and accurately and saved data can be used at any time whenever it is needed.
Is Software A Current Asset Or A Non-Current Asset?
Software is an intangible asset that has no physical appearance or existence. It is normally considered that every intangible asset is used in a business for a long period so intangible assets are classified as non-current assets.
Software is normally classified as a non-current asset because it is expected to be used for a longer period but if the software is expected to be used only for one year or less, it can be classed as a current asset because it becomes the company’s working capital. The following are the examples of software that are recorded as current assets in the balance sheet:
- Software license for a specific project and for a specific time
- Prepaid subscription for software
In short, the software is classified as per the company’s policies and intentions to use it. An enterprise resource planning system is classified as a non-current asset because it is used in business operations for a longer period while one-year cloud-based software services can be classified as a current asset.
What kind of asset is software?
Software is classified as an intangible asset that has no physical existence.
Is software a current asset & why it classified as a current asset?
Software can be classified as a current asset if it is purchased for a specific time or a specific project.
When software is classed as a non-current asset in the balance sheet?
Software is typically classified as a non-current asset because it is expected to be used in a business for a longer period.
Is software an intangible asset and why?
Software is an intangible asset because it has no physical shape or existence.