Info Circ 02-a-012 - Capitalization of Land and Land Improvements

Current policy requires agencies to capitalize any land or land improvements greater than $5,000. In order to reduce the capitalization of small amounts for GAAP reporting purposes, the Division of Accounts and Reports is increasing the land and land improvement limitation to $100,000, effective July 1, 2002. This limit should be applied to an entire land or improvement project, not each individual payment on the land or improvement. Policy and Procedure Manual Filing No. 7,002 will be updated to reflect this change as follows:

4310	Land and Interest in Land: Includes the cost of a portion of the earth's surface (excluding any structures thereon), long term leases, easements, and right-of-ways with a total cost of $100,000 or more.
4319	Land and Interest in Land - Non-inventory with a total cost less than $100,000.
4400	Land Nonstructural Improvements: Includes ponds, terraces, dikes, drainage ditches, fences, landscaping, walks, drives, streets, curbs, water wells, and boat ramps with a total cost of $100,000 or more.
4409	Land Nonstructural Improvements - Non-inventory with a total cost less than $100,000.

Please note that pursuant to K.S.A 75-3516, the director of accounts and reports shall maintain records of the real property owned by the state regardless of cost or value. Therefore, every real estate transaction engaged in by each state agency, except the secretary of transportation, will continue to be reported to the Division of Accounts and Reports via forms DA-84 and DA-86.

It is important to note that the capitalization thresholds that have been established by this and previous Informational Circulars, No. 01-A-018 and No. 01-A-021, are for financial reporting purposes only and in no way lessen an agency's responsibility to track and safeguard state assets. Please refer to the attachment to Informational Circular 01-A-021 dated June 21, 2001 regarding each state agency's responsibility for safeguarding state assets.

DB:bab