Version 1.0
Prepared by: @Lorraine Sebata
Approved by: @Davinia Munroe
Review date: 2025-08-20
Next review date: 2026-08-20
This policy applies to all tangible assets owned or considered owned by Easyterms (the "Company") that are used in operations and not held for resale.
To establish clear policy guidelines that ensure the proper recording, accountability, and safeguarding of the company's fixed assets, thereby maintaining compliance with accounting standards and internal controls.
This policy applies to all tangible assets owned or considered owned by Easyterms. (the "Company") that are used in operations and not held for resale.
A tangible asset must meet all the following conditions to be capitalized (recorded as a fixed asset):
Ownership: Owned or considered owned by Easyterms.
Usage: Held for use in the Company's operations (not for resale).
Useful Life: Has an initial estimated useful life that exceeds one year.
Cost Threshold: Has an initial cost (inclusive of ancillary charges) of at least $100.
3.2.1 Original Acquisition Cost: Fixed assets shall be accounted for at their historical acquisition cost. This cost includes the purchase price of the asset plus all ancillary costs necessary to bring the asset into its existing use and location (e.g., freight, insurance, installation fees).
3.2.2 Basket Purchases: When two or more assets are obtained simultaneously and their individual costs are not readily known, the total acquisition cost must be allocated to the individual assets based on the ratio of their relative fair market values at the time of acquisition.
Donated capital assets shall be recorded in the accounting records at their fair value on the date of receipt.
If the donation is received from non-shareholders, the fair value must be recorded as revenue (Other Revenues - Donations).
If the donation is received from shareholders, the fair value must be recorded as Equity (Additional Paid-In Capital).
The methodology used to determine the asset's fair value must be formally documented.
3.4.1 All documentation supporting the original acquisition cost, relocation, improvement, or betterment of a fixed asset, including costs and dates, must be maintained.
3.4.2 This documentation, along with reports substantiating the asset's existence and location, must be made available for examination by the External Auditors upon request.
Chief Financial Officer (CFO): Responsible for final review and approval of all fixed asset capitalization decisions, payment initiation approvals, and determination/documentation of fair value for donated assets.
Financial Department (Accountant): Responsible for ensuring correct recording (costing and classification) of fixed assets in the accounting system in accordance with this policy.
Administrative Department: Responsible for procurement, physical receipt, tagging, and maintaining the Fixed Assets Register.
External Auditors: Responsible for examining all supporting documentation to verify compliance with this policy.
This policy will be reviewed and updated annually, or sooner if there are significant changes to regulatory requirements or internal operational processes.