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What is a proper accounting treatment for the purchase of a block of IP Addresses?

Answers

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

Depends on the nature of your business.

Anonymous
(Assistant Controller) |

We are a SaaS company and purchased a block of IP addresses.

Topic Expert
Scott MacDonald
Title: President/Owner
Company: AlphaMac Resources, Inc.
(President/Owner, AlphaMac Resources, Inc.) |

If you are going to re-sell them at some point in the future, you could argue that they are "inventory". However, your period end evaluation for obsolete items would be difficult to do. Although there are some sites that value web addresses.

If it for internal use, you should expense it. I don't see any rational for trying to amortize the cost over time.

If the amount is "small" or "immaterial" to your operations, best thing to do is expense it.

Anonymous
(Assistant Controller) |

Thank you. Yes, IP Addresses are for internal use and the amount is material. If we decide to amortize, what is the common practice to determine the amortization period?

Iryna Buynytska
Title: Assistant Controller
Company: Zscaler Inc. (pre-IPO, SaaS / Cloud)
LinkedIn Profile
(Assistant Controller, Zscaler Inc. (pre-IPO, SaaS / Cloud)) |

Is IP Address acquired for internal use considered to be an intangible?

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