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: Business Procedures Manual | 7.4 Buildings and Building Improvements | University System of Georgia
Business Procedures Manual
Essential business procedural components for University System of Georgia institutions. 7.4 Buildings and Building Improvements
7.4.1 Building Definition
(Last Modified on May 1, 2017)
A building is a structure that is permanently attached to the land, has a roof, is partially or completely enclosed by walls, and is not intended to be transportable or moveable. 7.4.2 Building Improvement Definition
(Last Modified on May 1, 2017)
Building improvements are capital events that materially extend the useful life of a building or increase the value of a building, or both. A building improvement should be capitalized as a betterment and recorded as an addition of value to the existing building if the expenditure for the improvement meets or exceeds the capitalization threshold, or increases the life or value of the building by 25 percent of the original life or cost. Building improvements meeting the capitalization threshold or increasing the building value by at least 25 percent of the original cost should be recorded as an addition of value to the existing asset using a parent/child asset management relationship. The useful life of the improvement (the “child”) should generally not exceed that of the original asset (the “parent”). However, if the improvement is not an integral part of the original asset, it may possess a different useful life than the parent asset. For example, the useful life of a floor renovation project should not exceed the useful life of the building asset to which it relates because it is an integral part of the building that cannot exist on its own. Alternately, a wing addition to a building could have a useful life that exceeds the life of the building to which it is attached because it did not exist as part of the original asset. Building improvements increasing the building’s useful life by at least 25 percent of the original life period should be capitalized in one of two ways: