Definition and Threshold:
Capital purchases comprise furniture, fixtures, equipment, software, leasehold improvements that meet two criteria:
- an estimated life of at least three years, and
- the cost is in excess of $2,000
Donated equipment is capitalized at market value on the date of the gift. Depreciation is computed using the straight-line method and ½ year convention over the estimated useful lives of the assets.
Computers and peripheral equipment are expensed in the year of purchase. Maintenance, repairs and minor improvements are expensed as incurred.
Approval
NODA’s Capital Budget is updated each year and should include proposed capital purchases that are anticipated to take place during the year. Those purchases are itemized within the approved Association budget are considered approved.
NODA’s Capital Budget includes a discretionary fund (in case of emergency), of 1% of the current annual budget that can be accessed by the Executive Director without prior approval, provided resources are available, and with the stipulation that the Board be informed of any use of the fund at the next regular meeting.
Capital purchases not within the approved capital budget, or beyond the scope of the discretionary fund, must be specifically approved by the Finance Committee. To seek such approval the Executive Director must provide the price and rationale for the purchase and assurance of availability of financial resources to support the purchase.
Recordkeeping
NODA shall maintain a list of fixed assets showing the date of the acquisition, its cost, and a schedule for depreciation of the asset. NODA shall keep on file documentation for each purchase.
Annual depreciation expense will be included in NODA’s annual operating budget.
For each purchase, the Executive Director shall evaluate whether the acquisition will have an impact on insurance coverage, determine if present coverage valuations are adequate, and obtain additional coverage if necessary.