Q&A (back to index)
capitalizing assets
Posted by Anonymous on 06/13/2008 - 22:38
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capitalization policy
Companies have a lot of choice. There is no set amount that must be used.
I've seen companies use as low as $250 and as high as $5,000. Management sets the limit usually based on their determination of how much to expense now vs. later through depreciation. The size of the company should be considered.
The only caveat to a small company thinking of a high capitalization amount is to consider tax implications. Under a tax audit, the auditor might feel a high limit is not warranted and disallow the deductions.
I think the most common amounts are $500 to $1,000.