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: Examples of expenditures to be capitalized as buildings include: Purchased Buildings
Original purchase price
Expenses for remodeling, reconditioning, or altering a purchased building to make it ready to use for the purpose for which is was acquired (this would include payroll and related costs for employees directly involved in the modifications)
Environmental compliance, such as asbestos abatement, etc. Professional fees, such as legal, architectural, inspections, title searches, etc. Payment of unpaid or accrued taxes on the building to date of purchase
Cancellation or buyout of existing leases
Other costs required to place or render the asset into operation
Constructed Buildings
Completed project costs
Interest accrued during construction
Cost of excavating, grading, or filling of land for a specific building
Expenses incurred for the preparation of plans, specifications, blueprints, etc. Cost of building permits
Costs of temporary buildings used during construction
Unanticipated costs such as rock blasting, piling, relocation of the channel of an underground stream, etc. Permanently attached fixtures or machinery that cannot be removed without impairing the use of the building
Additions to buildings, such as expansions, extensions, enlargements, etc. Building Improvements/Replacements
The following are examples that should be capitalized as improvements to buildings if (1) the addition of value to the existing building meets or exceeds the capitalization threshold, or (2) the addition increases the life or value of the building by 25 percent of the original life or cost. Conversion of attics, basements, etc., to usable office clinic, research, or classroom space. Structures attached to the building, such as covered patios, sunrooms, garages, carports, enclosed stairwells, etc.