Title: Business Procedures Manual | 7.4 Buildings and Building Improvements | University System of Georgia
Headings: 7.4 Buildings and Building Improvements
Business Procedures Manual
Essential business procedural components for University System of Georgia institutions.
7.4 Buildings and Building Improvements
7.4.1 Building Definition
7.4.2 Building Improvement Definition
7.4.3 Depreciation Methodology
7.4.4 Capitalization Threshold
Purchased Buildings
Constructed Buildings
Building Improvements/Replacements
7.4.5 Building Maintenance Expense

Content: Other costs associated with the above improvements
Examples of building improvements that should be capitalized (even when the improvements do not meet the $100,000 threshold): Institution has a storage/maintenance building that originally cost $ 200,000 with a useful life of 15 years. After 10 years the building was structurally reinforced with steel beams at a cost of $ 50,000, which extended the useful life to 20 years. Even though the $ 50,000 did not meet the capitalization threshold, this improvement would be capitalized because it extended the useful life by 5 years (33%). Institution has a greenhouse that originally cost $ 300,000 with a 25-year useful life. In year 10, the original wooden floor was replaced with a concrete reinforced floor. The cost of the improvement was $ 80,000 and the useful life remained the same. The $ 80,000 should be capitalized because it improved the value of the overall asset value by 27%, which is more than 25% of the original cost. 7.4.5 Building Maintenance Expense
(Last Modified on May 1, 2017)
The following are examples of expenditures, which should be recorded as maintenance expenses because they do not qualify as capital improvements. Adding, removing, and/or moving of walls relating to renovation projects that are not considered major rehabilitation projects and do not increase the value of the building
Improvement projects of minimal or no added life expectancy and/or value to the building
Plumbing or electrical repairs
Cleaning, pest extermination, or other periodic maintenance
Interior decoration, such as draperies, blinds, curtain rods, wallpaper, etc.