Accounting Policy for [YOUR BUSINESS NAME HERE]
Adoption Date: MM/DD/YYYY
Purpose
This accounting policy establishes the minimum costs (capitalization amount) that shall be used to determine the capital assets to be recorded in our books and financial statements.
Capital asset definition and thresholds
A "capital asset" is a unit of property with a useful life exceeding one year and a per-unit acquisition cost exceeding $2500. Capital assets will be capitalized and depreciated over their useful lives. We will expense the full acquisition cost of tangible personal property below these thresholds in the year purchased.
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 our annual financial statements or books. In addition, assets with an economic useful life of 12 months or less must be expensed for both book and financial reporting purposes.
Documentation
Invoices substantiating the acquisition cost of each unit of property are to be retained for a minimum of 10 years.
Signed,
[TAXPAYER/TAX MATTERS PARTNER]
Adoption Date: MM/DD/YYYY
Purpose
This accounting policy establishes the minimum costs (capitalization amount) that shall be used to determine the capital assets to be recorded in our books and financial statements.
Capital asset definition and thresholds
A "capital asset" is a unit of property with a useful life exceeding one year and a per-unit acquisition cost exceeding $2500. Capital assets will be capitalized and depreciated over their useful lives. We will expense the full acquisition cost of tangible personal property below these thresholds in the year purchased.
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 our annual financial statements or books. In addition, assets with an economic useful life of 12 months or less must be expensed for both book and financial reporting purposes.
Documentation
Invoices substantiating the acquisition cost of each unit of property are to be retained for a minimum of 10 years.
Signed,
[TAXPAYER/TAX MATTERS PARTNER]