Title: Plant Fund | Financial Services & Operations | Michigan Tech
Headings: Plant Fund
Plant Fund
Plant Fund Definition
Capitalization of Plant Fund Assets Definition
Componentization
Capitalization Guidelines
New Construction
Purchase of Existing Buildings
Building Improvements
Site Work
Utilities
Land
Equipment
Capital Leases
Property Trade-In
Gifts
Library Books
Mineral Specimens

Content: Capitalization of Plant Fund Assets Definition
Physical property acquired by the University by purchase, gift, trade, or fabrication  and which take the form of land, buildings, equipment, improvements to land or buildings,  and other tangible items are capitalized. Financial Services and Operations is responsible for all accounting and budget control  functions for plant fund (construction) projects, and preparation of financial reports. Plant assets are stated at actual or estimated cost at date of acquisition. Construction  is capitalized as expended and reflected in net investment in plant. Current fund  expenditures of $50,000 or greater for renewals and replacements are capitalized only  to the extent that such expenditures represent long-term improvements to properties  or significant alterations, renovations, or structural changes that increase the usefulness  of the building, enhance its efficiency, or prolong its useful life. Equipment is capitalized when the unit acquisition cost is $5,000 or more, the estimated  useful life is one year or longer, and it has the capacity to function without the  assistance of another item
Straight-line depreciation is used when determining the useful life of the following: Land Improvement and Infrastructure—20 years
Buildings—40 years
Computer Equipment—5 years
Equipment—7 years
Library Books—5 years
Componentization
New building construction is capitalized by building components and grouped into three  general components of a building. Building Shell (including construction and design costs)
Building Services Systems (e.g., elevators, HVAC, plumbing system, heating and air-conditioning  system)
Fixed Equipment/Fixtures (e.g., sterilizers, casework, fume hoods)
The same depreciation methods are used at Michigan Tech for F&A purposes and financial  statements. Upon occupation of new construction, component analysis is completed by  the Facilities project engineer. The useful life of each component is as follows: