Title: SPA Process User's Guide – FPP N.005
Headings: SPA Process User’s Guide
–
Chapter 1 – Introduction to Capital Assets

SPA Process User’s Guide –
Chapter 1 – Introduction to Capital Assets
Buildings and Building Improvements
Building Definition
Building Improvement Definition
Building Componentization
Building Construction
Depreciation Methodology
Capitalization Threshold
Examples of Expenditures to Capitalize as Buildings
Purchased Buildings
Constructed Buildings
Examples of Expenditures to Capitalize as Improvements to Buildings
Building Maintenance Expense
Building Demolition Costs

Content: Replacement of a part or component of a building with a new part of the same type and performance capabilities (i.e. replacement of an old boiler with a new one of the same type and performance capabilities, etc.) Any other maintenance-related expenditure that does not increase the value of the building
Building Demolition Costs
The Governmental Accounting Standards Board (GASB) has determined that demolition costs shall be capitalized or expensed depending on the following situations: If land and building are purchased with the initial intent to use the land and demolish the building, the cost to demolish the building shall be capitalized as land improvement. If land and building are purchased with the initial intent to use the land, demolish the building and build a new building, the cost to demolish the building shall be capitalized as part of the cost of the new building if the demolition occurs soon thereafter. If land and building are purchased with the initial intent to use the land and the building, the costs to demolish the existing building at a later date shall be expensed. The demolition costs are an expense associated with the cost of using the existing asset and should not be capitalized in the cost of the new asset.