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Capital Asset Accounting FAQs

  • How do we know if an equipment is permanent?  
  • All fixed equipment costs associated with the construction or purchase of new buildings and structures should be capitalized. Subsequent purchased equipment that is movable equipment should not be included in the building and structures but instead be capitalized as inventorial equipment. As a general rule, equipment will not be considered permanently fixed to the structure if it can be removed without costly or extensive alterations or repairs to the building and if the space it occupies could be readily used for other purposes.
  • How should leasehold improvements be treated?
  • Leasehold improvements over $35k are additions and modifications to leased space to meet tenant use requirements and are included in the building and structure.
  • Is roof replacement capitalized?
  • Roof replacements by themselves should be expensed. Roof replacements which are part of a larger building upgrade or enhancement may be capitalized.
  • What is the dollar threshold and useful life for each asset?
  • Standard capitalization thresholds and useful life for capitalizing assets have been established for each asset category. All UC campuses are required to use these thresholds for capitalization:

    Asset Class* Unit Acquisition Threshold Useful Life
    Personal Property    
    Movable Equipment $5,000 2-20 years
    Library - General All 15 years
    Library - Rare All Not depreciated
    Special Collection (other than library) All Not depreciated
    Real Property    
    Land All Not depreciated
    Infrastructure $35,000 25 years
    Building and Structure Improvement $35,000 15-33 years
    Building and Structure Purchase All 15-33 years
    Fixed Equipment $35,000 15-33 years
    General Improvement $35,000 15 years
    Intangible Assets    
    Software $5,000 3-7 years
    Other Intangible $5,000 40 years
    *Asset must have an estimated useful life of greater than one year. 
  • What is an unallowed activity?
  • 1.) General Funds: only $100,000 of any given Minor Capital Improvement Project under $400,000 may be funded from 19900/199xx funds. Please consult with the Capital Program Management Office for the use of General Funds for Minor Capital Improvements with a total project cost over $400,000.

    2.) Federal Grant and Overhead Funds: projects funded from overhead (69750) can only be used for projects totaling less than $100,000.

    3.) Lottery Funds: (10182) may not be used to fund Minor Capital Improvement Projects. However, the sponsoring department may request that Capital and Space Planning coordinate a swap of these funds for more "capital friendly" funds, as available.

    4.) Income Accounts: may not be used to fund Minor Capital Improvement Projects. A Reserve Account should be used for funding.