[Unipos] Accounting for software

Overseas product procurement service Unipos handles various software.

In the past, outright sales were the mainstream, but software that is provided on a subscription basis (term contract system) has also increased.In addition, there are many expensive products for large-scale analysis software such as big data.
Customers new to the software have complained about compliance concerns.

“This software is expensive, but how will it be treated in terms of accounting?”
"Which account do you sort subscription licenses into?"

It is not uncommon to receive such consultations.

For customers who have such troubles, this time we will introduce information about accounting processing of software.
If you check the accounting process of the product before introducing it, you can smoothly apply for the budget, and it will also prevent troubles such as having to make corrections in a hurry after being pointed out at the end of the term or at the time of the audit. please give me.

 

Form of software provision

Software is broadly divided into two types: one-time purchase and subscription.

What is one-time purchase software?

Software that can be used continuously for only the cost at the time of purchase

【merit】
no additional costs

【Demerit】
The price is the same whether the usage period is short or long
Due to limited versions available,You will need to repurchase to use the latest version.

 

What is subscription software?

Software that can be used for a period of time (license period) after purchasing the right to use it on a yearly or monthly basis
*For some software, the software itself is purchased outright, and support and upgrades are provided as a subscription.

【merit】
Purchase only as long as you need it
Always have the latest version available

【Demerit】
continue to incur costs

 

Software Accounting and Accounting

Purchased software, subscription software, and the classification of each accounting process are as follows.

Outright Software Accounts and Accounting

For software purchased outright, the subject changes depending on the price.
Please pay attention to the distinction between less than 10 yen and 10 yen or more that need to be recorded as assets.

	SMEs, etc.		Other than SMEs
	Basic	Special measures
10 less than one million yen	Expenses (consumables, etc.)	-	Expenses (consumables, etc.)
10 10,000 yen or more and less than 20 10,000 yen	Intangible fixed assets *Amortization period of 5 years	Lump-sum depreciation possible * Lump sum depreciable assets (3-year straight-line depreciation) Or small depreciable assets (lump sum during the period)	Lump-sum depreciation possible *3-year straight-line depreciation
30 less than one million yen		Lump-sum depreciation possible *Small amount of depreciable assets (Lump sum during the period)	Intangible fixed assets *Amortization period of 5 years
30 yen or more		-

 

[Reference: Exceptions for inclusion of necessary expenses in the acquisition cost of small depreciable assets] If a small or medium-sized business acquires depreciable assets with an acquisition price of less than 30 yen between April 18, 4 and March 1, 4, up to a total of 3 million yen per year will be deductible. Measures that can be counted in *It has been extended to March 4, 6 due to the 3 tax reform. National Tax Agency – Special provision for deducting the acquisition cost of small depreciable assets for small and medium-sized enterprises https://www.nta.go.jp/taxes/shiraberu/taxanswer/hojin/5408.htm

 

Accounting for subscription software

Subscription software is expensed (lease fees, payment fees, etc.).
If the license period, such as when purchasing 2 years at a time,If the usage period is extended, the amount equivalent to the remaining usage period must be carried over to the next period as prepaid expenses.

Summary

As introduced, the method of accounting for software depends on its form of provision and price.cost"When"Asset”.
Appropriate journal entry is related to the taxable amount and financial evaluation of the organization, so it is an item that is also checked during budget application and approval.

We would appreciate it if you could help us with smooth budget application.

※※important※※ The content introduced in this article is the principle processing as of December 2022.Systems and standards are subject to change due to legal revisions. Please refer to the page of the Ministry of Economy, Trade and Industry for the research and development tax system. Ministry of Economy, Trade and Industry – Research and Development Tax System https://www.meti.go.jp/policy/tech_promotion/tax.html Please operate research grants provided by public institutions and companies in accordance with the rules established by the provider. Appropriate processing differs depending on the type of corporation and accounting standards.Please consult with your auditing firm or tax advisor.

■ Unipos for overseas products Please feel free to contact us if you have any concerns or questions regarding the introduction of overseas products.