# Capitalization threshold

> Capitalization threshold — The written dollar amount, and minimum useful life, below which an entity expenses a purchase that would otherwise be an asset. GAAP sets no amount — its provisions need not be applied to immaterial items; many US companies align it with the IRS de minimis safe harbor.

Source: https://lopifi.com/glossary/capitalization-threshold
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**What is capitalization threshold?** In accounting, capitalization threshold means the written dollar amount, and minimum useful life, below which an entity expenses a purchase that would otherwise be an asset. GAAP sets no amount — its provisions need not be applied to immaterial items; many US companies align it with the IRS de minimis safe harbor.

## Also known as

- Capitalization policy

## Words this system refuses for it

- GAAP limit
- the $2
- 500 rule (the safe harbor is a tax election)

- **Category:** Fixed assets & leases
- **Specified in:** [Lexicon](https://lopifi.com/md/docs/domain/11-lexicon)
- **Related:** de-minimis-safe-harbor, capitalization, useful-life, asset, safe