Capitalizing Projects at Year-End
Buildings constructed or acquired for $500,000 or more, or major modifications/renovations made to existing buildings during the year for $500,000 or more are capitalized as an asset.
§ Costs considered part of the building - record in the 552xxx G/L's: This includes expenses associated with constructing the building such as contractor costs, fixed equipment and costs that are necessary to make the building functional. For example, the cubicle pieces would be part of the building as they are necessary to function as part of an office, a Fume hood would be part of the building as fixed equipment (G/L 552314) as would hot water heaters, etc. Masking tape purchased to use for painting should be included in the 552 G/L’s as it is necessary in order to paint the building. Expenses in the 552xxx G/L’s (except for the 3 moveable equipment G/L’s mentioned below and Artwork G/L 552321) are capitalized as part of the building. Items such as window shades/blinds would not be part of the building as they are not necessary for the building to function, therefore should be recorded to a 53xxxx Supplies and Materials G/L.
§ Moveable equipment >$5,000 – record in one of the 3 capital moveable equipment G/L’s (552315, 552316 or 552331) for building projects. These items are tagged/capitalized as an asset separate from the building.
§ Items that are not considered part of the building - record in 53xxxx G/L's with the exception of the 5318xx G/L’s: Items that are not part of the building would go under Supplies and Materials. This would include any moveable equipment that is less than $5,000 as well. With the exception of the 5318xx G/L’s, the 53xxxx G/L’s will not be capitalized as part of the building as they are not directly related to construction the building and the cost should be expensed. The 5318xx G/L’s will be capitalized as part of the building as they represent expenses to construct the building.
§ Repair & Maintenance (525xxx G/L’s) – generally, these G/L’s should not be used on a building construction/renovation project with a total cost of $500,000 or more. In the rare situation that there is an actual repair and maintenance project being done within the same construction/renovation project WBS, these G/L’s may be used. However, these G/L’s will not be capitalized as part of the building as they should be expensed as R&M.
“Land Improvement” projects, which include the following types of improvements, in excess of the amounts listed are capitalized as an asset:
§ Landscaping Improvements (parking lots, fencing and gates, tennis courts, athletic fields, etc.) - $100,000
§ Infrastructure (street, sidewalks, street lighting, storm sewer piping, etc) - $250,000
All “land improvement” expenses should be recorded to G/L 551200.
For further information on capitalizing buildings and land improvements, please reference the University of Nebraska Capitalization Policy.