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: 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. Repairs or replacements that have an effect on a capital asset’s functionality or materially extend a capital asset’s expected useful life should be capitalized. The useful life of an asset is considered extended when the change to the asset is significant enough to cause the expected useful life to increase beyond the original estimation. Improvements should either increase usefulness, function, or service capacity. 3. Fixed Equipment
Costs associated with the construction or purchase of new buildings and structures should be capitalized.