Can a government select different capitalization thresholds for different types of capital assets?

The correct answer emphasizes that a government can indeed select different capitalization thresholds, but this flexibility is generally restricted to certain classes of capital assets. This means that while the government can establish varying thresholds, these thresholds must be justified and aligned with the characteristics of the different asset classes.

For example, a government may decide to have a higher threshold for expensive infrastructure projects like roads and bridges, while setting a lower threshold for more common, everyday equipment. This approach allows for a more tailored asset management strategy, which can better reflect the economic realities and usage patterns of different asset types.

Having specific thresholds for certain classes rather than a one-size-fits-all approach acknowledges that different types of assets may have different significance, lifespans, and capital impacts, thereby facilitating more effective financial reporting and resource allocation.