What is a fixed asset capitalization policy?
A fixed asset capitalization policy is an internal accounting policy within a specific company or organization that explains how to capitalize fixed assets and what it takes for an asset to qualify as a fixed asset. Technically, once an asset is put on the balance sheet, it's capitalized, but the fixed asset capitalization policy decides if fixed assets are treated as such and expensed over time or if they're treated as shorter-term assets and expensed all at once.
For example, a Fortune 500 company might purchase a new copy machine for $25,000 that year, which is, by definition, a fixed asset. But for a business of that size, it might not make sense to designate such a small purchase as a fixed asset, so it would instead be treated as a regular asset and expensed all at once. A new multimillion-dollar facility, however, would definitely be considered a fixed asset, and the fixed asset capitalization process within the company would apply.