Info Circ 01-A-018 - Capitalization of Buildings and Building Improvements

Current policy requires agencies to capitalize any building or building improvement greater than $2,000. In order to reduce the capitalization of small amounts, the Division of Accounts and Reports is increasing the building and improvement limitation to $100,000 effective July 1, 2001. This limit should be applied to an entire building or improvement project, not each individual payment on the building or improvement. Policy and Procedure Manual Filing No. 7,002 will be updated to reflect this change as follows:

4200

Buildings and Improvements: Includes all structures with a total cost of $100,000 or more, commonly called "buildings", including all attached fixtures such as electric wiring and fixtures, plumbing pipes and fixtures, heating and cooling facilities, tunnels, connecting heat, light, water, sewer and other utility lines and all fixed power plant equipment and machinery such as boilers, compressors, stationary motors and generators. This also includes sewage disposal plants, water pumping stations and central refrigerating plants.

4209

Buildings and Improvements - Non-inventory (effective 07-01-00) with a total cost greater than $500 and less than $100,000.

Professional judgment should be used by the agency to determine whether an improvement is a normal maintenance repair, paid using expenditure sub-object code (ESO) 2440, or an improvement paid using ESO 4200 or 4209. Generally, an addition or improvement either enhances the assets functionality (effectiveness or efficiency), or extends the assets expected useful life.

All payment vouchers submitted to the Division of Accounts and Reports must clearly indicate if the payment is a maintenance repair or a capital improvement. Please state on the face of the voucher "Total improvement amount less than $100,000" when applicable.

Any payments charged to ESO 4209 will not be included on your monthly Capital Outlay Expenditure Report (DAFR 8460) nor should they be included on Form DA-80A Inventory General Reconciliation worksheet submitted at year-end.

DB:GB:lmm