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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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Dental equipment is purchased with the related software. To

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Dental equipment is purchased with the related software. To run the software, one must purchase the license & training. The equipment, software, license & training are all listed separately on the invoice. Is the software depreciated over 3 years? Should I add the license & training to the basis of the dental equipment?

LEV :

Hi and welcome to Just Answer!
The computer software to be depreciated over 3 years - that should be off-the-shelf computer software purchased after August 10, 1993. As that software is purchased with the dental equipment - it is assumed as part of that equipment and depreciated with that equipment.
The cost of license may be expensed based on license terms. Thus if that is an annual license - it is expensed in the year paid. If that is three year license - it is amortized over three years. If that license is over the period you own the dental equipment - then you may add the license cost to the cost of the equipment and depreciate together.
The cost of training may be expenses in the year paid.

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