Capitalization of Assets Policy

Purpose and Scope

All purchases of capital assets including but not limited to furniture, equipment, computer hardware and software and leasehold improvements shall be accounted for in accordance with generally accepted accounting principles (GAAP) in the following manner:

Procedures

• Depreciation of office equipment purchases are calculated using a straight-line method over the estimated useful life of 5 years with 10% of the depreciation expense recorded within the first year of acquisition and 20% over subsequent years.
• Depreciation of office furniture purchases are calculated using a straight-line method over the estimated useful life of 5 years with 10% of the depreciation expense recorded within the first year of acquisition and 20% over subsequent years.
• Depreciation of computer hardware purchases are calculated using a straight-line method over the estimated useful life of 3 years with 15% of the depreciation expense recorded within the first year of acquisition and 30% over subsequent years.
• Depreciation of computer software purchases are calculated using a straight-line method over the estimated useful life of 2 years with 50% of the depreciation expense recorded within the first year of acquisition and 100% in the following year.
• Depreciation of leasehold improvement expenses are calculated using a straight-line method over 5 years, with 10% of the depreciation expense recorded within the first year of acquisition and 20% over subsequent years.

Exemption from this policy requires Board approval.