HRobinson80,

I cannot tell you what the "best approach" is, but I can present a couple of options to you and you can decide what works best for you.  Your post did not specify if your interest is for tax or financial reporting.  I will assume the latter, and consequently, my answer here will focus on financial reporting.

One option is to do exactly what you wrote, i.e., create a new asset record that will account for the enhancements to your base software.  If you choose this option, I recommend that you also add a note or add something into the description fields on both records that tie both assets together.  Why?  Because if you dispose of the base software, you will likely want to dispose of the enhancements as well.  You could accomplish this through a bulk disposal, i.e., a disposal of both assets in one transaction, and because of this, as you find the original asset should your intention be to dispose, you will find it helpful to have a reference on the record that will point you to its mate, i.e., the enhancements, in this case.

In the alternative, another option is to edit the original asset record for the base software.  Increase its acquisition value by the cost of the enhancements.  If the enhancements add additional life to the underlying asset, you could also increase the estimated life accordingly.  If you pursue this option, I recommend that you also change the depreciation method to RV to ensure the full amortization of the asset over the life of the asset.

A few final words about computer software.  Personally, I don't know what "base software" means.  But software purchased or developed for R&D (research and development) is expensed.  Software used for other purposes such as sales or administration, is amortized over a straight-line method, and the RV method I mentioned above would qualify.  The general rule under GAAP is to amortize software over a life of 60 months, i.e., 5 years, as you already indicated in your post.