BOP Program Statement 8563.08 § 1

computing and recording depreciation charges for all Federal

Prison Industries (FPI) fixed assets at both Central Office and

field locations.

Depreciation is a systematic and rational allocation of the

acquisition cost of an asset, less its estimated salvage or

residual value, over its estimated useful life. The system of

allocation should match cost with related revenue correctly,

while recognizing the asset’s declining service value.

Depreciation expenses are to be recognized on all fixed assets

that meet FPI’s capitalization criteria as outlined in the

Program Statements on Machinery and Equipment and Building and

Improvements. All factories are to use the straight-line method

of depreciation.