1. Implementing Assets
  2. Set Capitalization and Low Value Thresholds

Set Capitalization and Low Value Thresholds

This task shows you how to set capitalization and low value thresholds.

  1. Go to Setup and Maintenance > Setup: Financials > Fixed Assets > Manage Asset Books > Advanced Rules tab.
  2. Enter values in this table:
    Field Description
    Capitalization Threshold Type
    • Cost: When you select this value the total cost of the asset or source line is compared with the capitalization threshold limit.
    • Unit: When you select this value the per unit cost of the asset is compared with the capitalization threshold limit.
    Threshold Currency Currency in which the capitalization threshold is maintained, which may be different than the functional currency of the ledger.
    Note: This field is available only if you opt into the Capitalization Threshold in Foreign Currency feature.
    Threshold Conversion Rate Type Rate type used to convert the capitalization threshold amount to the functional currency of the associated ledger.
    Note: This field is available only if you opt into the Capitalization Threshold in Foreign Currency feature.
    Capitalization Threshold Amount The lowest amount an asset should cost to be capitalized. Assets with a cost that is less than this amount are expensed.
    Low Value Threshold Amount Low value assets are assets that need to be capitalized, but must be fully depreciated either in the period of acquisition or in the first year of life. If the low value threshold isn't required for your setup, enter the same amount for the capitalization threshold and the low value threshold.

  3. Click Save.

Set Low Value Asset Depreciation Rules for Categories

You can also specify threshold amounts by category if you need different threshold amounts for different categories.

Note: If you specify threshold amounts by category, the category threshold amounts override the threshold amounts defined for an asset book.

  • Navigate to: Setup and Maintenance > Setup: Financials > Fixed Assets > Manage Asset Categories> Select a category > Edit > Accounting Rules section > Default Rules tab.

  • In the Low Value Asset section of the Edit Category page, enter the capitalization threshold amount, low value threshold amount, depreciation method, life, and prorate convention.

  • Click Save.