If your business does not have a capitalization policy or if it has not been updated in recent years, this is a critical accounting issue.
Download your copy of this Capitalization Policy Sample for your company to use as a reference.
A capitalization policy establishes, for book purposes, that a property purchase (1) over a minimum expenditure (e.g. $5,000, $2,500, etc. per unit) and (2) having a useful life of one year or more be capitalized. If an expenditure meets the capitalization policy, it would be capitalized for book purposes. If an expenditure does not meet the capitalization policy, it should be expensed.