The Capitalization Debt Readiness Checklist.

01 — Policy & thresholds

1. Can you produce your written capitalization policy right now — and was it last reviewed within the past three years?

   A policy nobody can find is a policy nobody is applying. A threshold set a decade ago silently reclassifies more spend every year that prices move.

2. Do projects, procurement, AP and accounting all apply the same definition of what gets capitalized — including freight, installation, sales tax, internal labor and soft costs?

   The seams between those four teams are where basis errors are born, and none of the four believes the seam belongs to them.

02 — CIP & closeout

3. What is the oldest item sitting in your CIP balance, and can someone explain today why it is still there?

   Aged CIP is the single largest reservoir of capitalization debt. If nobody owns the answer, the absence of an owner is the finding.

4. Is there a defined trigger and a named owner for moving a project out of CIP and into service — or does closeout happen when someone remembers?

   Operational completion and accounting completion are different events. Only one of them tends to get calendared.

5. Are placed-in-service dates determined by when the asset actually began operating, or by when the paperwork cleared?

   The gap between those two dates is real depreciation expense landing in the wrong period — and in every period after it.

03 — Componentization & useful lives

6. When you capitalize a building, a production line or a data center, is it componentized — or does it land as one asset, on one life, in one entry?

   A single line for a fifty-million-dollar build is fast to book and impossible to retire, insure, or defend accurately.

7. Have your useful lives been re-examined against how the assets are actually replaced — rather than inherited from whoever configured the system?

   Power and cooling replaced every eight to fifteen years inside a thirty-nine-year building life is a misstatement that compounds annually.

04 — Retirements & physical existence

8. When was your last physical inventory — and did the differences it found actually get posted?

   A count that ends in a spreadsheet nobody acted on is worse than no count: you now have documented knowledge of an error you left in place.

9. Can you demonstrate that every asset scrapped, sold or transferred in the past two years has been retired on the books?

   Disposal is the last mile nobody owns. The register is usually the last system to hear about it, and sometimes never does.

10. If an auditor selected ten assets from your register today, could you physically locate all ten?

    This is the honest test. Most registers start failing it somewhere between the seventh and the tenth.

05 — Knowledge continuity

11. Is there more than one person who could run your fixed asset close — sub-ledger through GL reconciliation — without help?

    Single-person dependency is the risk that turns every other item on this list from a finding into a crisis.

12. Is the reasoning behind your fixed asset decisions written down anywhere — or does it live in one person’s memory and a spreadsheet they maintain?

    Data can be reconstructed. Judgment cannot. When the reasoning leaves, every future decision starts from zero.