10/28/2026
How much does something have to cost before it becomes an asset instead of an expense? Your capitalization policy is the written answer.
It sets a dollar threshold — commonly somewhere between $1,000 and $5,000 — above which purchases get recorded as fixed assets and depreciated over their useful lives, rather than expensed immediately.
Without a written policy, the decision gets made inconsistently, one purchase at a time. That distorts your expenses year to year, complicates your depreciation schedule, and gives your auditor something to ask about.
The threshold itself matters less than having one, documenting it, and applying it consistently.
Comment "GUIDE" if you don't have this in writing yet.