Capitalization and Depreciation Policy Template for your Nonprofit Organization

Free Download: Capitalization and Depreciation Policy Template

The Capitalization and Depreciation Policy for your organization establishes crucial guidelines for the appropriate accounting of assets and their depreciation over time. It underscores the significance of correctly recording the value of the organization's assets and ensuring compliance with accounting standards. The policy details the process for capitalizing assets, determining useful lives, recognizing depreciation expenses, and disposing of or impairing assets.

In the policy, criteria for capitalizing assets are outlined, with emphasis on a periodically reviewed threshold based on industry practices and the organization's financial policies. The depreciation methods are determined based on accounting standards, tax regulations, and management's assessments, with straight-line depreciation set as the default method. The document also explains the procedure for estimating useful lives and the process of recognizing and recording depreciation expenses. In case of asset disposal or impairment, the policy describes the review process, recognition of impairment loss, and recording of disposal gains or losses. Proper documentation is maintained to support capitalization and depreciation records and provide transparency to stakeholders. By adhering to this policy, an organization can ensure accurate asset accounting, appropriate recognition of depreciation, and compliance with accounting standards.