Authorization Process

This section outlines the authorization process for removing capital assets from the general ledger for land, improvements to land & buildings.

 

Accounting Process

  • Facilities Management or Student Affairs requests a new project/speedtype when a new structure is to replace one about to be demolished. 
  • Facilities Management or Student Affairs will notify CCO if there is a demolition without a new structure being built.
  • CCO will RETIRE the assets associated with the demolished building once the demolition is completed. PeopleSoft Asset Management (PSAM) will credit the asset accounts, debit the depreciation, and record any net book value in 970300 Gain/Loss.

Demolition

Facilities Management & Housing Project Management work with campus leadership to determine if demolition of the existing structure is the best option. Factors to be considered are historical significance, cost/benefit, and higher purpose.

  • If the building or improvement is demolished, and a new structure is built immediately following the demolition the cost will be capitalized as part of the new structure.
  • If the demolition is completed and no immediate plans are in place to build a new structure, the cost of demolition will be expensed, not capitalized.
  • If the building or improvement is donated or sold and removed from CU control, review the first two bullet points above for the next steps.

鈥婥apital Asset Records/Depreciation Policies: Depreciation

  • Each campus has a policy for useful lives based on historical experience within the category of asset. 
  • All the campuses follow the same capitalization thresholds set by the Office of University Controller working with the State Controller鈥檚 Office.
  • Depreciation on assets is calculated using the straight-line method. 
  • Depreciation is calculated monthly using the PSAM module. 
    • The first month of depreciation is the month the item is received.
    • No depreciation is calculated in the month of disposition.
    • Depreciation expense is automatically calculated on a monthly basis by the PeopleSoft Asset Management (PSAM) module based on the NBV for the remaining useful life of the asset.
    • Once calculated, an automated journal entry is created within PeopleSoft 
  • Land - Land is not depreciated.
  • Land Improvements - The following useful lives will be used for calculating depreciation:
    • Roads/Sidewalks/Surface Parking/Utility/Wi-Fi/Bridges/Tunnels = 20 Years
    • Buildings/New Construction - New construction is generally assigned a useful life of 40 years.
    • However, building components may be identified separately and assigned useful lives that reflect the period of time that the asset is expected to be in service before needing to be replaced. Generally, buildings are componentized into three major categories:
      • Building Shell
      • Building Systems
      • Capital Equipment
    • Many sub-categories may exist within these major categories. If it is known that a building will be taken out of service prior to the 40-year or componentized useful life, the shorter known life expectancy should be used.
  • Building Renovations - Each renovation project is tracked separately and depreciated over 20 years. If it is known that a building will be taken out of service prior to the 20-year or componentized useful life, the shorter known life expectancy should be used.
  • Leasehold Improvements - Leasehold improvements should be depreciated over the expected life of the lease or 20 years if the expected life is unknown, e.g., assumed renewal.
  • Equipment - Each type of equipment purchased within the Fund 71 project will be assigned an estimated useful life based on the historical experience of similar equipment. At CU 麻豆影院, equipment lives vary based on the type of equipment and are determined on the useful life table based upon campus historical experience. For unique items built by a department, the department will be asked to provide an expected useful life.
  • Other categories occasionally included within a Fund 71 project:
    • Software - Software will be assigned a useful life of 5 years or based upon the expected period of time it will provide benefits.
    • Works of Art, Historical Treasures, and Rare Collections - Generally, these works are not exhaustible and do not need to be depreciated. However, suppose the item is one that is diminished by display or educational or research applications. In that case, the item will be depreciated over its estimated useful life in the category of Depreciable Collections.