Better account for your computer software and software consulting costs with the guidelines provided in this sample policy.

According to this policy, capitalized computer software costs should be depreciated over a five-year period or a shorter period, which can be established as appropriate. If the use of a software program is discontinued before the end of its depreciation period, the remaining net book value should be expensed as a loss on the disposal of fixed assets. Capitalized computer software should be classified as part of machinery and equipment for the company’s reporting purposes (not as an intangible asset).