Depreciation is merely a way to show that over time the fixed asset is used up or loses its value. To determine the amount to depreciate annually, the useful life of the asset must be determined as well as a residual value, if any. In the simplest form of depreciation, straight line, the cost of the asset, less its residual value, is divided by its useful life in years and the quotient represents the annual amount of depreciation expense. The depreciation expense is reported as an operating expense in the statement of revenues, expenses, and changes in retained earnings. The accumulation of the annual depreciation expense amounts is the accumulated depreciation.
Accumulated depreciation is shown as a deduction from fixed assets in the balance sheet.
It is the entity's policy decision which determines the threshold. Your CPA would be an excellent resource in helping you make that decision. The most significant problem with fixed assets in governmental units is the lack of fixed asset records. This means that many governmental units really do not know what fixed assets they own and what their value is. Once the GASB has finalized that project and issued a statement it will have an implementation date and will give details regarding asset valuations, recording, and reporting.