1,528: Fixed Asset Capitalization (Other than Equipment)

Last Revised: April 2006

The following fixed assets will be capitalized and maintained in the university accounting system, property management sub-system by the Controller's Office.

Land consists of real property purchased by the university or donated for operating purposes. The cost of land should include all costs such as: purchase price of land or fair market value at time of gift; commissions; professional fees (title searches, architect, legal, engineering, appraisal, etc.); land excavation, fill, grading, drainage; demolition of existing buildings and improvements (less salvage); removal, relocation, or reconstruction of property of others; other costs incurred in acquiring the land.

Buildings consist of all university structures used for operating purposes and include all permanently attached fixtures, machinery, and other components that cannot be removed without damaging the buildings. If a component can be removed without damaging the building, it should be considered equipment and not included in the cost of the building. The cost of buildings should include all direct costs of construction.

Building improvements consist of any significant structural changes including major improvements, additions, or alterations that involve an expenditure of $250,000 or more that are not recurring in nature and that usually increase the use value (efficiency, productivity, or use utility) or the useful life of the building beyond what it was before the alterations. The amounts to be capitalized include the contract price of construction; architectural fees and services; expenditures incurred in remodeling, reconditioning and making the building suitable for the intended purpose; and interest incurred during the period of time required to complete and prepare the asset for its intended use.

Improvements other than buildings include all improvements to land other than buildings, such as streets, pavements, parking lots, fencing, athletic fields, tennis courts, landscaping and utility distribution systems (telephone, electrical, heat, computer, etc.). Only those components with an expenditure of $250,000 or more should be capitalized.