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: 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. Fixed equipment does not include: Permanent coverings (such as paneling or tiling),
Central air conditioning and heating systems,
Plumbing and plumbing fixtures (such as sinks and bathtubs),
Electrical wiring and lighting fixtures, escalators, elevators, or sprinkler systems. These items are building components. In addition, capital moveable equipment should not be included in fixed equipment. As a general rule, equipment will not be considered permanently fixed to the structure if it can be removed without costly or extensive alterations or repairs to the building and if the space it occupies could be readily used for other purposes.