Capitalization of Building
About This Policy
- Effective Date:
See current policy
- Date of Last Review/Update:
- Responsible University Office:
- Capital Assets
- Responsible University Administrator:
Vice President and Chief Financial Officer
- Policy Contact:
Director of Auxiliary Accounting, Capital Asset Management, Non-Student Accounts Receivable, and Student Loan Administration
- Policy Feedback:
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The cost of the building shall include all direct expenses. 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.
In order for costs to be capitalized and added to the cost of an existing building, they must meet the following criteria:
- Expenditures per building for alteration or renovation must be at least Seventy-five Thousand Dollars ($75,000) or twenty percent (20%) of the historical cost of the existing building at June 30 of the previous year, whichever is lower to be capitalized.
- The improvement must be an attached fixture.
- The expenditure must increase the life or enhance the utilization of the building.
The building should be identified in the account description of the construction account utilizing the correct object code on the Purchase Order and disbursement documents.
A list of the current object codes (income and expense classes) is available by contacting your campus Chart of Accounts Manager or the Kuali Financial System's Object Code References Tables.
All capitalized building projects should be processed through a construction account or renewal and replacement account and should not be recorded in an operating account. Any federal funds used should be allocated to the correct disbursement object code.