The capitalization policy is usually between $1,000 and $5,000. Any amount less than the minimum capitalization policy should be expensed. However, it is not necessary to rigidly adhere to this number. For example,a $5,000 part of a $5 million airframe is not material. If one part must be present for the aircraft to be operational and it is not subject to further need for control, there is no reason to consider less than the entire airframe one base unit. However, a $3,000 radio set, life raft, and other emergency equipment contained in the aircraft may be an appropriate separate asset to be tracked. Factors other than a reasonable minimum capitalization level are the ability to control, the possibility of getting lost, and so forth.
Similarly, maintenance requirements and the ability to check that necessary maintenance is accomplished must be taken into consideration. Individual components of a manufacturing production line will have differing maintenance requirements. Personal computers, disk drives, molding, and welding or fabrication equipment may have little maintenance need. However, the components that do the fabrication may have close tolerances that should be ensured on a specific interval of calendar time, hours of use, or a combination thereof. Components that have different maintenance requirements should be established as distinct assets.
For some items, there are legally mandated maintenance intervals. In addition to aircraft, large trucks operating on the highway must have periodic maintenance as well as inspections to ensure they are within tolerance. Records must be maintained and made available when requested. Thus, individual components such as tractors, trailers, airframes, engines, and electronic equipment with legally required maintenance or inspections should be established as separate assets.
Industry practices must also be taken into consideration. In the cattle industry, different practices exist for the commercial breeder who produces genetic improvements in breeding cattle. The commercial breeder typically maintains records of a cow and calf unit until the calf is weaned, and then will keep a record of the year's production of steer calves. The registered breeder, however, will create a new asset record for each calf as it is born. The difference in the industry is the relative value of a new calf, which will vary from $200 to $300 for a commercial breeder to $15,000 to $100,000 for the registered breeder. Also, individual records of the lineage of the new registered calf are necessary. The recording of individual birth dates, weaning weight, and birth weights contributes to the value of the registered breeding animal.
Similary, aircraft and trucks have periodic maintenance routines that may keep them in usefulness well beyond their depreciation life. Practice in the industry requiring legal inspections and continuous maintenance will keep these assets in use well beyond reasonable depreciation lives.
In some government units, it is necessary to maintain asset records for small and inexpensive items. Examples are police and fire safety equipment. Pistols and revolvers, oxygen units, and other small items must be controlled for security reasons.