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General Accounting Discussions: Fixed Asset Capitalization Rules

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    • CommentAuthorMichaelF
    • CommentTimeOct 29th 2007
     
    Must you capitalize and assign a deprectation schedule to all assets? Can you arbitrarily decide to expense purchases of any company equipment? I have a client that expenses almost all of their computer purchases and would like to to do the same with company vehicles. It does not seem wise to me but is it permissable?
    Thankful People: AmyJ, Dennis Hoover, tessymac
    • CommentAuthorglpeterson
    • CommentTimeNov 15th 2007
     
    I have found some documentation on the internet that states the IRS will allow you to expense things below a threshold that you set, based on materiality, if they find the threshold to be reasonable for your company. My company expenses below $10,000 items.
    • CommentAuthoramber
    • CommentTimeDec 3rd 2007
     
    Not sure how exactly this applies to Corporations but it applies to Sole Proprietors and Partnerships. See Section 179 Election to Expence Certain Depreciable Business Assets) of the tax code.
    • CommentAuthorAmyJ
    • CommentTimeJan 13th 2008
     
    I am not clear on best approach. I have moved from corporate books to small business, and know for tax purpose we can use Section 179 for depreciation on a vehicle. (over 6000 lbs).. However, do we still need to capitalize at the purchase cost or do we also accelerate the depreciation on the financial books. Eg.

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