PRO 2.225 Property, Plant and Equipment

1. In order to implement the property, plant and equipment policy, the following guidelines shall be followed: The business division shall maintain inventory records on all capital assets. Such records will show, among other things, the following information: description, location, manufacturer, serial number, date of purchase, cost, and estimated useful life.
2. Capital assets shall be considered all tangible items with an acquisition cost of $5000.00 or more and a useful life of at least two years (and/or as described under Capital Asset Class Definitions).

CAPITAL ASSET CLASS DEFINITIONS:

1. Buildings/Building Renovations:
   • All capital expenditures for building/building renovations shall be recorded in the college’s plant fund.
   • The cost of a building and initial acquisition shall include all expenses related directly to the acquisition or construction.
   • Construction costs shall include materials, labor, overhead directly related to the construction, building permits, and fees, i.e. attorney and architecture. Interest on indebtedness related to the building will be capitalized during the construction process. All direct costs incurred in preparing the building for intended occupancy shall be considered to be a capital cost of the building.
   • In order for costs to be capitalized and added to the cost of an existing building, they must meet the following criteria:
     • Expenditures for alteration or renovation must be at least $50,000.
     • The improvement must be an attached fixture.
     • The expenditure must increase the life or enhance the utilization of the building.
2. Equipment and Furniture:
   1. Capital expenditures for equipment and furniture shall be recorded in the current or plant fund of the college.
   2. Examples of categories of equipment and furniture shall include classroom equipment, classroom furniture, computer equipment, institutional equipment, institutional furniture, and equipment donations.
   3. Equipment and furniture shall be capitalized as a separate asset if the acquisition value is $5,000 or more.
3. Software
   • Software shall be capitalized as a separate asset if the acquisition value is $5,000 or more. All other software shall be either capitalized as part of equipment if included in the original equipment purchase or directly expensed if purchased separately.
4. Land
   • All costs incurred in acquiring land should be considered as part of the land cost. These expenditures shall include the purchase price, closing costs, and the assumption of any mortgages or liens. All direct costs incurred in getting land ready for use shall also be considered as part of the land price. Any other land improvement shall also be considered a land capital expenditure if it increases the utility.
   • Land purchased with the purpose of constructing a building is capitalized as land. Any costs incurred in getting the land ready for the use will also be considered part of the land, i.e. razing the structure. Benefits received for clearing the land in preparation of building will be considered a reduction on the price of the land.
5. Infrastructure
   • Improvements on land that have a life of their own exclusive of the land or building(s) on that land should be capitalized in this category.
   • Infrastructure covers improvements related to land but not associated to buildings. Infrastructure expenditures have a life exclusive of a building. The infrastructure category of capital fixed assets includes sidewalks, outside lighting, roads, parking lots, and treatment facilities.
6. Capital Lease
   • If a leasehold contract contains an Option to Purchase, payments on Plant which are being leased on long-term contracts should be capitalized as leasehold assets. The contract must be for at least two (2) years, ownership of the property will be transferred to the college at the end of the lease, and the college must have the right to purchase the asset at the end of the lease or during the lease term.
7. Learning Resource Collection
   • All catalogued acquisitions shall be capitalized. Departmental purchases of manuals or other professional guides not catalogued in the college library system will not be capitalized. A year end adjustment will be recorded based on a physical inventory taken.

MAINTENANCE OF FIXED ASSET RECORDS:

Fixed asset records shall be maintained for the purpose of providing a professional and reasonable basis for current insurance valuations. These records shall be in compliance with the requirements of Generally Accepted Accounting Principals.

The college shall maintain equipment records in regard to additions and deletions of fixed assets. The college shall take a periodic fixed asset inventory and reconcile any differences to the fixed asset records. As part of this inventory process, the detailed fixed asset inventory should be reconciled to the general ledger. The college shall retain the services of a fixed asset appraisal company to annually revalue the assets for insurance purposes.

DEPRECIATION OF CAPITAL ASSETS

For purposes of depreciating capital assets required by current accounting standards, capital assets with a cost of $5,000 or more will be capitalized and depreciated based on the following schedule of useful lives:

CAPITAL ASSET	USEFUL LIFE
Buildings/Building renovations	40 years
Software	25 years
Land	25 years
Infrastructure (land improvements)	20 years
Learning Resource Collection	6 years
Occupational Lab Classroom Equipment	10 years
Other Classroom Equipment	10 years
Classroom Furniture	20 years
Computer Equipment (Hardware)	5 years
Institutional Furniture	20 years
Office Equipment (Fax, Copiers, Etc.)	5 years
Machinery, Tools, and Grounds Equipment	5 years
Audio/Visual Equipment	5 years
Other Equipment	5 years

To view the policy, go to POL 2.225 Property, Plant and Equipment