Title: Accounting for Buildings & Improvements | Finance & Business
Headings: Accounting for Buildings & Improvements
Accounting for Buildings & Improvements
Guidance on establishing when costs for buildings and improvements must be capitalized at the university.
Procedures
1. Purchased Buildings:
2. Construction and Improvements:
3. Fixed Equipment
4. General Improvements

Content: Capital expenditures recorded to current fund must use object code 9700. At the end of each fiscal year, a listing of object code 9700 expenditures will be prepared and reviewed by Capital Asset Accounting for proper classification. Refer to attachment A for cost examples that are capitalized as building improvements or expensed. Determining the capitalization of expenditures paid from current funds: Activity
Description
Treatment
Improvements or betterments
Significant alterations or structural changes to plant assets which increase the usefulness, enhance the efficiency, or prolong the life of property. Capitalize
Repairs
Normal, regularly recurring disbursements to keep property in an efficient operating condition, neither adding to the value of the property nor appreciably prolonging its life. Expense
Replacements
Replacements of component parts of buildings or structures that do not significantly lengthen the a life of the entire asset. Expense
Reconditioning
Purpose of improving operating efficiency. Capitalize
Care should be taken to distinguish capitalizable improvements from non-capitalizable maintenance cost. Normal, regularly recurring repairs and maintenance to keep property in an efficient operating condition should not be capitalized.