Accounting of Pirated Software?

[nabeelanwer]

Dear Friends

I need your seggestions regarding recognition of "Priated Softwares" as an asset of a company. A company usually acquires Pirated Softwares at very nominal cost or somtimes just download it from internet or copy from CDs. Now at what amount such software should be recognised in the books.

Regards.

[nabeelanwer]

Would anyone like to put suggestions on above thread.. thanks

[nabeelanwer]

Not even one person out of 42 viewers has resloved my query...!

[msc286]

In my view it should not be recognized as an asset as it's not a legal transaction and secondly the title of the asset (in this case the pirated software) has not been transferred to the company.

[kamranACA]

Dear,

As far as downloaing of software is concerned, it involves no directly attributable cost and cash outlay. Since, its cost cannot reliably be measured, it can never be recognised either such downloading is lawful or not.

Further, in case of procuring pirated CDs of software, it is totally illegal action against which the developers/owners are getting to be little bit assiduous now-a-days. In my view, every company should get appropriate licensing and should give equal importance to its IT related tangible as well as intangible assets. Auditors must raise these points in their letters to board of directors and Management Letters etc.

IAS 16 does not provide for instructions where something is illegally acquired. In IFRSs, it is assumed that every thing is transparent and legally enforceable. Without legal title and ownership rights etc, these pirated softwares can only be expensed out.

Best regards,

Kamran.