Accounting and Bookkeeping

Fixed Assets

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Feb 04, 2019

An organization records fixed assets on the books when it purchases items it will use and benefit from for a period of time greater than one year. Before the organization records fixed assets, it should determine the value at which an item qualifies as a fixed asset instead of an expense. Determining the value of a fixed asset is called a "capitalization policy." Typically this value is based on the overall size of the organization. For small nonprofits, an item worth more than $500 to $1,000 is typical for a capitalization threshold.

Fixed assets are broken down into two broad categories:

  1. real property-typically determined by an appraisal
    1. land
    2. buildings
    3. collection items 
  2. furniture and equipment- determined by the amount paid to purchase the item
    1. desks
    2. chairs
    3. computers
    4. printers

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