Capitalizing external IT costs to switch from Exchange to Google?

Why would you capitalize the costs?

IMHO it is a maintenance type expense.

Would you capitalize upgrading Exchange X or Exchange Y?

Do CFO and/or CTOs prefer to buy the hardware and software to put it on the books as an asset and write it off? I've heard this in the past as a reason why they don't buy cloud related services and/or managed services.

Wayne, I would tend to agree with you, however, I am trying to counter an argument to capitalize the costs. Someone heard that a company is capitalizing the costs to get NetSuite up and running and want to know why I said converting to Gmail/Google Apps is different.

In some instances you would be able to capitalize costs related to the change in the platform. There are specific rules around accounting for internally developed software of what you can and cannot capitalize.

How about capitalizing costs related to getting SaaS software ready for use? Software, such as Google Mail/Apps or NetSuite?

It has to all be expensed since you are not the "owner" therefore the software is not an asset but monthly subscription expense and the related implementation expenses also get expensed. If anyone has a solid arguement on capitalizing Saas related expenses I would love to know it! Good luck, Brenda

Thanks Brenda. Expensing the costs is certainly the straightforward answer. I am looking forward as well to see if anyone has an argument on capitalizing SaaS related costs.

I have to agree with Brenda that you don't own it and never will versus the changes in accounting for most leases whether FMV or $1 buy-back because there is the possibility that you can own it.