Capitalization and Depreciation Policy Template for your Nonprofit Organization

Capitalization and Depreciation Policy screenshot

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.

Talk to an expert

For bookkeeping and accounting support beyond these templates, get in touch with the Jitasa team.

Request a Quote

Additional Resources

If you’re interested in investing in a trained accountant to help your nonprofit ensure transparency and accountability in finances, conduct your research. Here are some additional resources you can look into for more guidance:

Working With a Nonprofit Accountant: What to Expect

Working with an accountant can help your organization develop an effective budget. Read more about what an accountant can do for you in this comprehensive article.

What to Expect

Bookkeeping and Accounting for Nonprofits

Looking to hire or outsource a finance team? Learn more about both bookkeeping and accounting for nonprofits, specifically about the difference between them.

Jitasa’s Services

Top 10+ Outsourced Nonprofit Accounting Firms

Working with an accountant specifically dedicated to nonprofits is important for developing a well-informed nonprofit budget. Learn more about Fundly’s top ten picks for outsourced firms.

Read Post