Read our Summary of Revised Repair Regulations.
[Name of my company or client]
This accounting policy establishes the minimum cost (capitalization amount) that shall be used to determine the capital assets that are to be recorded in [name of your business]’s annual financial statements (or books).
2. Capital Asset definition
“Capital Asset” is defined as a unit of property that: (1) has an economic useful life that extends beyond 12 months; and (2) was acquired or produced for a cost of $____ or more. Capital Assets must be capitalized and depreciated for financial statement (or bookkeeping) purposes.
3. Capitalization thresholds
[Name of your business] establishes $______ as the threshold amount for minimum capitalization. Any items costing below this amount should be expensed in [name of your business]’s financial statements (or books).
4. Capitalization method and procedure
All Capital Assets are recorded at historical cost as of the date acquired.
Tangible assets costing below the aforementioned threshold amount are recorded as an expense for [name of your business]’s annual financial statements. Alternatively, assets with an economic useful life of 12 months or less are required to be expensed for financial statement purposes, regardless of the acquisition or production cost.
Invoice substantiating an acquisition cost of each unit of property shall be retained for a minimum of four years.