Capitalization

Purpose
These guidelines shall be observed by the management and staff of the company, who are directly concerned with the accounting and management of company-owned tangible property, in relation to all transactions related to the acquisition, maintenance, sale or other final disposition of such property.  The guidelines serve as the company’s compliance with the Internal Revenue Code and the tangible property regulations put into effect.

Tangible Property 
Refers to all tangible personal and real property acquired or produced by the company as implements, tools, materials, supplies, equipment, furniture, land, buildings, and fixtures for its place(s) of business for the purpose of carrying out all aspects of business operations.

Tangible Property Not Subject to Capitalization:
De Minimis Amounts – Amounts paid to acquire or produce tangible property not exceeding $2,500 are to be charged to the appropriate expense accounts.  All tangible property expenditures with an acquisition or production cost under the stated threshold are to be charged to the expense accounts.  This policy does not apply to land and property intended to be included in inventory.

Fixed Asset System
Mains’l maintains the records for all capitalized assets in the Fixed Asset System (FAS).

The following data will be captured in the FAS:
1.    Description of the property
2.    Serial number of other identification number
3.    Acquisition date
4.    Cost of the property
5.    Location of the property (department)
6.    Use and condition of the property
7.    Disposition data, including the sale price of the property

It is each department’s responsibility to ensure that the assets are maintained and kept in good working condition.