Expenditure on computer software is in some circumstances
treated for accounting purposes as part of the cost of the related
hardware and not as an intangible fixed asset within FRS10. In
those circumstances the software is excluded from Schedule 29,
except as regards royalties.
The expenditure excluded in this way is defined in FRS10 as:
‘Software development costs that are directly attributable to bringing a computer system or other computer operated machinery into working condition for its intended use within the business’.
Other computer software expenditure is not excluded from Schedule 29 by this paragraph and may well amount to an intangible fixed asset. But capital expenditure on software may be the subject of an election to exclude it from Schedule 29 and to take capital allowances instead. (See CIRD25180).