Finding Text
Capitalization of Fixed Assets Our audit revealed that several transactions were charged to an expense account that should have been capitalized as a fixed asset and several transactions that were capitalized that should have been expensed. Generally accepted accounting principles allows for capitalization of costs if the organization anticipates receiving future benefits from such assets. Pinn Gardens, Inc.’s policy is to capitalize initial, individual cost of $1,000 or more and an estimated useful life in excess of one year. This occurred due to management oversight. Failure to properly capitalize fixed assets may cause the financial statements to be inaccurate. Recommendation We recommend that the management capitalize fixed assets in accordance with established policies.