TO: Chair and Housing Authority Commissioners
THROUGH: Krishna Namburi, Executive Director
FROM: Nicole Utz, Director of Housing
SUBJECT:
title
Asset Capitalization Threshold
Ward(s): All Wards
Commissioners(s): All Commissioners
Neighborhood(s): All Neighborhoods
Result Area(s): Safe and Healthy Community; Welcome and Livable Neighborhood
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SUMMARY:
summary
Revision of Salem Housing Authority Asset Capitalization Policy to reflect an increased threshold from $3,000 to $5,000.
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ISSUE:
Shall Salem Housing Authority adopt SHA Resolution No. 2321 and revise the Housing Authority Capitalization Policy, increasing the threshold at which assets are capitalized from $3,000 to $5,000?
RECOMMENDATION:
recommendation
Adopt SHA Resolution No. 2321 and revise the Housing Authority Capitalization Policy, increasing the threshold at which assets are capitalized from $3,000 to $5,000?
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FACTS AND FINDINGS:
Under the updated Internal Revenue Service’s (IRS) regulations, and in accordance with the Generally Accepted Accounting Principles (GAAP), agencies with audited financial statements are allowed to establish capitalization minimum threshold amounts to up to $5,000. Upon the recommendation of the Authority’s auditors, and after reviewing the Authority’s past purchases, staff is recommending that the minimum threshold be increased to $5,000.
BACKGROUND:
The Housing Authority’s Asset Capitalization Policy provides guidelines for determining whether an asset, such as a piece of equipment, fixture, or real property may be capitalized (expensed over the useful life of the asset), or expensed in the year purchased. The current Asset Capitalization Policy set the threshold at $3,000 in October 2018. This threshold is reviewed periodically to determine if it is appropriate to the true cost of capital expenditures. The current threshold amount causes additional administrative work and typically includes items that are ordinary and necessary business expenses to be depreciated over a period of time, instead of expensed within the current fiscal period.
Nicole Utz
Director of Housing
Attachments:
1. SHA Resolution No. 2321
2. Salem Housing Authority Capitalization Policy