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: Instead, the following items should be recorded as maintenance expense. Adding, removing and/or moving walls relating to renovation projects that are not major rehabilitation projects and do not increase the value of the building
Improvement projects of minimal or no added life expectancy and/or value to the building
Plumbing or electrical repairs
Cleaning, pest extermination or other periodic maintenance
Interior decoration (i.e. draperies, blinds, curtain rods, wallpaper, etc.) Exterior decoration (i.e. detachable awnings, uncovered porches, decorative fences, etc.) Maintenance-type interior renovation (i.e. repainting, touch-up plastering, sink and fixture refinishing, replacement of carpet, tile or panel sections, etc.) Maintenance-type exterior renovation (i.e. repainting, replacement of deteriorated siding, roof, masonry sections, etc.) 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.