Hubbell Policies

CAPITALIZED SOFTWARE COSTS POLICY

English

Owner : Vice President, Controller

Last Review: 2015.08.14

FIN – 08

Department: Finance

POLICY Certain costs relating to developing or obtaining software for internal use may be capitalized. The Procedure for Capitalized Software Costs defines what costs may be capitalized and over what period those costs should be amortized. Costs that do not qualify for capitalization according to the Procedure for Capitalized Software Costs are period costs and must be expensed as incurred. Internal use software developed by Hubbell The cost of developing internal use software (i.e., an internal use “software project”) should be capitalized based on the guidance set forth in the Procedure for Capitalized Software Costs, when the total project cost exceeds $25,000. Internal use software obtained by Hubbell The cost to obtain a “canned” software package (i.e., off-the-shelf software) or software licenses for internal use should be capitalized when the cost eligible to be capitalized exceeds $5,000. Costs to obtain internal use software that do not meet this threshold should be expensed as incurred. Software items or licenses that are individually less than $5,000 in value but are purchased together and are functionally interdependent components of a system or project may be capitalized. Internal use software purchases exceeding of $5,000 require a completed AFE (Authority for Expenditure) and must follow the Authority for Expenditures (AFE) Procedure. SCOPE The policy applies to costs relating to obtaining internal-use software and projects to develop internal use software. This policy does not apply to costs relating to software that may be sold, leased, or otherwise marketed as a separate product or as part of a product to be sold to a customer. Consult with the Corporate Controller’s office if software is identified that meets this condition. PURPOSE The purpose of this policy and the Procedure for Capitalized Software Costs is to define what costs relating to internal use software or internal use software projects may be capitalized. PROCEDURE This procedure establishes the requirements for capitalizing and amortizing costs associated with internal use software obtained from a third party or internal use software developed by Hubbell. 1. Internal use software developed by Hubbell (a “software project”)

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