Capital Asset Accounting

All expenses related to new construction or renovation projects with a cost of $100,000 or more and all acquisitions of land and building must be accounted for in Plant Funds - Ledger 8 accounts. Capital Asset Accounting (CAA) oversees the account creation and maintenance of Ledger 8 accounts, and is responsible for the management of the capitalization and depreciation processes associated to University capital projects.

Account create and maintenance:

• Account Creation 
  • Facilities or unit managed?
    • Facilities managed: If a unit would like Facilities to manage the project, they must contact Facilities. Facilities is responsible for initiating any account create requests for projects they manage.
    • Unit managed: The unit will work directly with CAA to request a project account. Units are responsible for ensuring proper approvals (see next section) have been obtained prior to the completion of a Form 70A.
• Verify Project Authorization
  • All capital projects, including approvals, are governed by University Policy 1301 - Project Planning, Approvals and Controls
  • Construction or renovation projects are approved either through the annual capital budget process or via an off-cycle request. For additional information on the project approval process, please contact the Budget Office.
• Process funding and budget entries for approved projects
  • CAA is the only authorized group on campus to submit funding and budget transfers to/from Ledger 8 accounts
  • Budget increases on existing capital project accounts must comply with University Policy 1301.
• Monitoring of existing capital project accounts
  • CAA is responsible for the on-going FAS maintenance of existing accounts (e.g. updating Authorized Signers/Account Administrators, reviewing capitalization criteria for budget adjustments, etc.).
  • CAA is responsible for monitoring the overall portfolio of Ledger 8 accounts, including capital indicator, budget balance available, etc.
• Close completed project accounts
  • Facilities or the unit is responsible for notifying CAA of any accounts that are ready for closure (e.g. all construction is complete and all trailing charges have posted to the account). Prior to requesting account closure, Facilities or the Unit must:
    • Review the status of the account to ensure that there are no open encumbrances, the voucher payable balance in the General Ledger is zero and that the account is not over budget.
    • Submit a closure memo or email requesting the account to be closed. If there are funds remaining in the account, CAA will return the funds to the original funding account, unless otherwise noted in the closure request.

Capitalization and Depreciation:

• Capitalize building expenses and record depreciation for buildings
  • Building capitalization occurs at the time of a project closure or annually at fiscal year-end. Capitalization of land, building and book expenses are made in accordance with University Policy 1004.1 - Capitalization Policy: Land, Buildings, Equipment, and Books and University Policy 1004.4 - Building and Building Renovation Construction Costs. Estimates of construction in progress and book additions are recorded quarterly in FAS for financial statement purposes.
  • Building and book depreciation is recorded annually at fiscal year-end in accordance with University Policy 1004.2 - Depreciation of Land Improvements, Buildings, Equipment, and Books. Monthly depreciation estimates are recorded in FAS; however, these entries are reversed with the year-end amount for actual building depreciation.
• Capitalize equipment expenses and record depreciation for equipment
  • Equipment capitalization occurs annually at fiscal year-end. Capitalization of equipment is made in accordance with University Policy 1004.1 - Capitalization Policy: Land, Buildings, Equipment, and Books. Estimates of equipment capitalization are recorded quarterly in FAS for financial statement purposes.
  • Building and book depreciation is recorded annually at fiscal year-end in accordance with University Policy 1004.2 - Depreciation of Land Improvements, Buildings, Equipment, and Books. Monthly depreciation estimates are recorded in FAS; however, these entries are reversed with the year-end amount for actual equipment depreciation.
• Capitalization of interest
  • CAA is responsible for identifying and recording the annual capitalized interest costs in accordance with University Policy 1004.8 - Capitalization of Interest.
• Capitalization of software purchases and/or development and implementation of software
  • Specific rules apply to software implementations. Please click here for additional guidance.