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The IRS rule for capitalizing a purchase is if it is over $2,500.  But this is not necessarily the guideline a company wants to establish.  Capital assets are recorded in a “capital asset ledger” with the date of purchase, cost, depreciation method, useful life, salvage value and accumulated depreciation. Think of how a staff accountant, would write policy for a company in what  type of expenditures should be capitalized and depreciated versus  expensed.   .  Does it matter what type of company it is?   How would this policy affect the balance sheet and the fixed asset ratio?

The IRS rule for capitalizing a purchase is if it is over $2,500.  But this is not necessarily the guideline a company wants to establish.  Capital assets are recorded in a “capital asset ledger” with the date of purchase, cost, depreciation method, useful life, salvage value and accumulated depreciation. Think of how a staff accountant, would write policy for a company in what  type of expenditures should be capitalized and depreciated versus  expensed.   .  Does it matter what type of company it is?   How would this policy affect the balance sheet and the fixed asset ratio?

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments
Section: Chapter Questions
Problem 16GI
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The IRS rule for capitalizing a purchase is if it is over $2,500.  But this is not necessarily the guideline a company wants to establish.  Capital assets are recorded in a “capital asset ledger” with the date of purchase, cost, depreciation method, useful life, salvage value and accumulated depreciation. Think of how a staff accountant, would write policy for a company in what  type of expenditures should be capitalized and depreciated versus  expensed.   .  Does it matter what type of company it is?   How would this policy affect the balance sheet and the fixed asset ratio?

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