What is a capitalization policy for property and equipment?

 Property and Equipment

Property and equipment includes items such as:

1.      Office furniture and equipment

2.      Computer hardware

3.      Computer software

4.      Leasehold improvements

It is the organization’s policy to capitalize all items which have a unit cost greater than one thousand dollars ($1,000). Items purchased with a value or cost less than one thousand dollars ($1,000) will be expensed in the period purchased.

The depreciation period for capitalized assets is as follows:

Computer Hardware                                                    36 months

Office Equipment                                                        60 months

Office Furniture                                                          60 months

Computer Software                                                     36 months

Leasehold improvements                                            Length of lease

1.      A Fixed Asset Log is maintained by the Bookkeeper including date of purchase, asset description, purchase/donation information, cost/fair market value, donor/funding source, identification number, life of asset.

2.      The Log will be reviewed by the Owner/President.

3.      Annually, a physical inspection and inventory will be taken of all fixed assets and reconciled to the general ledger balances.

4.      The Owner/President shall be informed in writing of any change in status or condition of any property or equipment.

5.      Depreciation is recorded at least annually. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Any impaired assets discovered during the inventory will be written down to their actual value.