Effective Date: November 13, 2023
The purpose of this Capitalization Policy is to establish guidelines for the capitalization of assets and to ensure consistency and compliance with accounting standards for Orangutan Outreach ("the Organization").
This policy applies to all assets acquired, constructed, or received (via donation) by the Organization and provides guidance on the capitalization thresholds and treatment of capital assets.
- Capital Assets: Assets with a useful life beyond one year that are used in the normal course of operations and have a significant value.
- Capitalization Threshold: The dollar amount above which an expenditure on an asset is capitalized rather than expensed.
4. Capitalization Thresholds:
- Land: All land acquisitions will be capitalized at their full cost with the approval of the Board of Directors.
- Donated items and material goods with a cost equal to or exceeding and estimated $10,000 will be capitalized with the approval of the Board of Directors.
- The Organization will use the straight-line method of depreciation for all capitalized assets.
- Depreciation will begin in the month the asset is placed in service.
- The useful life of each asset will be determined based on industry standards or specific conditions related to the asset.
6. Disposal of Capital Assets:
- Capital assets that are no longer in use or have been replaced will be disposed of in accordance with applicable laws and regulations.
- Any proceeds from the disposal of assets will be recorded appropriately and used for the mission of the Organization.
7. Record keeping:
- Proper documentation, including invoices, purchase orders, and related information, must be maintained to support the capitalization of assets.
- All capitalized assets will be recorded in the Organization's financial records.
8. Review and Revision:
This policy will be reviewed periodically and revised as necessary to ensure alignment with accounting standards and the needs of the Organization.
This Capitalization Policy has been reviewed and approved by the Board of Directors in November 2023.
- Contact Information:
For questions or clarification regarding this policy, please contact us.
P.O. Box 833
Hudson, NY 12534