Software & Databases

Computer software developed or obtained for internal use can be capitalized if the cost of the license is $500,000 or more and the software license has a useful life of greater than one year. Software is considered to be developed or obtained for internal use if both of the following tests are met:

• The software is purchased, internally developed, or modified solely to meet the University’s internal needs;
• During the software’s development or modification, no substantive plan exists or is being developed to market the software externally.

Software purchases less than $500,000 can only be charged as capital equipment when the cost is bundled as a part of the original purchase of equipment that meets the capitalization criteria and the software is a necessary component for the equipment to function. If the software is itemized as a separate cost or is not an essential element of the capitalized equipment, it must be charged to G/L account 516200 (Software License).