NetAsset - Capitalization Thresholds
Overview
NetAsset allows for direct expensing of an asset instead of capitalizing it if the gross asset value is below the specified capitalization threshold. The process to set up capitalization thresholds is outlined below.
If capitalization thresholds are not preferred, a transaction can be direct expensed by following the instructions in the Direct Expensing (From Create Assets Screen) article.
Step-by-Step Process
- Go to NetAsset > NetAsset Setup > Manage Capitalization Thresholds > New.
- Fill in the required fields to create the appropriate threshold:
| Field | Description |
| Accounting Book | The accounting book to which the capitalization threshold applies. If left blank, the threshold will apply to all books. |
| Subsidiary | The subsidiary to which the capitalization threshold applies. If left blank, the threshold will apply to all subsidiaries. |
| Asset Type | The asset type to which the capitalization threshold applies. If left blank, the threshold will apply to all asset types. |
| Department | The department to which the capitalization threshold applies. If left blank, the threshold will apply to all departments. |
| Class | The class to which the capitalization threshold applies. If left blank, the threshold will apply to all classes. |
| Location | The location to which the capitalization threshold applies. If left blank, the threshold will apply to all locations. |
| Amount | The threshold value at which all assets with a lesser (or equal) capitalized asset value will be expensed rather than depreciated. |
| Minimum Amount | Sets a lower bound for the capitalization threshold, if required. This is particularly useful for organizations with "negative" assets. |
If only an Amount is set for the threshold, the system will treat any value below that threshold as a direct expense, potentially down to negative infinity. This may present an issue for organizations with "negative" assets. By setting the Minimum Amount to zero, the standard capitalization threshold can be maintained while still allowing the capitalization of negative assets when necessary.
- Go to NetAsset > NetAsset Setup > Manage Asset Types & Mappings.
- Click Edit for the relevant asset types and enter the appropriate account in the Direct Expense Account field:
Expense Asset Example
- When an asset is created below the threshold, the depreciation schedule will contain a single line indicating that the asset will not be capitalized:
Additionally, you’ll notice that the Queue for Capitalization button is replaced with Queue for Expensing at the top of the screen.
- For system efficiency, both assets for capitalization and those for expensing follow the same process flow through the Queue Additions and Run Monthly Asset Journals screens.
- After the monthly asset journals are run, the asset record will be updated to reflect a status of Expensed and the corresponding NetAsset Direct Expense Entry:
- The journal will include a debit to the relevant expense account and a credit to the corresponding fixed asset clearing account: