{"id":2594,"date":"2016-05-18T14:41:14","date_gmt":"2016-05-18T14:41:14","guid":{"rendered":"https:\/\/www.peeriosity.com\/shared-services\/articles\/?p=2594"},"modified":"2022-07-28T23:58:25","modified_gmt":"2022-07-28T23:58:25","slug":"making-the-case-to-increase-fixed-asset-capitalization-levels","status":"publish","type":"post","link":"https:\/\/www.peeriosity.com\/shared-services\/articles\/2016\/05\/making-the-case-to-increase-fixed-asset-capitalization-levels\/","title":{"rendered":"Making the Case to Increase Fixed Asset Capitalization Levels"},"content":{"rendered":"

How your company sets capitalization thresholds for fixed assets has a significant impact on how large your Fixed Asset department<\/a> needs to be.\u00a0 When you consider the volume of purchases, typically as the dollar amount increases the number of transactions drops dramatically.\u00a0 However, increasing the threshold, while it might be supported based on reasonable materiality limits and the positive impact of reducing the accounting workload<\/a>, isn\u2019t a trivial exercise, with a one-time impact on earnings, and a range of personal property tax and income tax-related considerations.<\/span><\/p>\n

A recent PeercastTM<\/sup> in the General Accounting (R2R) research area<\/a> on the topic of Capitalization Thresholds featured a $15B company that increased their threshold significantly from USD $500 following an implementation plan that took eighteen months to complete, with the first five months needed to complete the analysis and get approval to proceed.\u00a0 For the featured company, during the prior 12 years revenues had increased by 400%, with an increase in net property and equipment of over 500%. The existing threshold was outdated, requiring too many transactions by the Fixed Assets team for small-dollar purchases.<\/span><\/p>\n

Some of the lessons learned included:<\/span><\/p>\n