Plant funds, in general, are funds used for the construction, acquisition, and renovation or maintenance of university capital assets. Capital assets are tangible items with a useful life of at least one year and meet the university’s capitalization criteria.
Capital Asset Categories
The university reports the following capital assets:
Real property purchased or acquired by gift or bequest. The university should have title before land is recorded.
Regardless of amount, all expenses incurred for land acquisition are capitalized. Land, purchased property are capitalized at purchase price plus acquisition costs. If existing buildings on the property will be utilized, the fair market value are capitalized as buildings and the amount recorded as land would then be the difference between the total cost less the amount capitalized as building. If the building needs to be demolished to raze a new building, the cost of demolition should be included in razing the new building and should be capitalized as building.
Land has an unlimited life and is not depreciated.
Improvements, other than buildings, which prepares the land for its intended use. Infrastructures are stationary in nature and are basic physical facilities needed for the university’s operations.
New or renovations to existing land improvements and infrastructures over $100,000 that would increase its usefulness, efficiency, or asset life are capitalized.
Examples of expenses, but not limited, to be included in the cost of land improvements are:
- Parking lots
- Athletic fields, tennis courts, basketball courts
- Water and sewer systems
- Dams and Storm Basins
- Electrical substations
- Fiber optic network cables (telecommunications)
Land improvements and Infrastructures are depreciated over its estimated useful life of 10 years using the straight-line method.
A building is permanently attached to the land, has a roof, and is serviced by utilities. Building improvements are capital expenditures that extend the useful life of a building. Building Improvements includes new construction, additions, renovations, repairs, fixed equipment installation and similar projects.
Any new construction or acquisition of a building is capitalized. Renovations of existing buildings over $100,000 that would increase its usefulness (i.e. usable space), efficiency (i.e. elevator, roofing, HVAC), or asset life are capitalized.
Examples of expenses, but not limited, to be included in the cost of buildings are:
- Purchase price
- If donated, fair market value at time of gift
- Professional fees (legal, architect, inspections, management fees, etc.)
- Environmental compliance (i.e. asbestos abatement)
- Expenses incurred for plan preparation, blueprints, etc.
- Cost of building permits
- Cost of temporary building used during construction
- Permanently attached fixtures or machinery that cannot be removed without impairing the use of the building.
- Additions/Extensions/Expansions to buildings.
- Conversions of attics, basements, etc. to usable space.
- Structures attached to the building (i.e. covered patios, garages, etc.)
- Installation or upgrade of heating and cooling systems
- Installation or upgrade of wall or ceiling covering (i.e. tiles, paneling, etc.)
- Structural changes (i.e. reinforcement of walls, installation or replacement of interior framing)
- Installation or upgrade of windows, doors, built-in closet and cabinets, etc.
- Interior renovation associated with ceiling trim, light fixtures, etc.
- Exterior renovation (i.e. siding, roofing, masonry, etc.)
- Installation or upgrade of plumbing and electrical wiring
- Installation or upgrade of phone, CCTV systems, networks, cables, etc.
All buildings are depreciated on a straight line basis.
Buildings are assigned a useful life based on the following criteria:
- New Building – 50 years
- Building Improvement Componentized as follows: -
Components Useful Life in Years Construction Exterior 30 Construction Interior 20 Elevators 23 Fire Protection 23 Fixed Equipment 15 Floor Cover 10 Floor Structure 50 Foundation 50 Heating Ventilation AC 23 Lighting Electrical 23 Piping Plumbing 23 Roof Structure 50 Site Preparation 50 Steel Frame 50 Wall Exterior 30
These projects are established to track all revenues and costs of ongoing construction, renovation and acquisition of long-lived assets for the university that will be capitalized. Generally, these projects are created with a minimum budget of $100,000 that would increase assets usefulness, efficiency, or life.
Funds must be in placed before opening a new plant fund project. Projects with budget of $5M or more need Board of Governors (BOG) approval. New project request and project budget analysis forms must be completed to open a new plant fund project (70xxxx).
Construction in progress assets are capitalized to their appropriate capital asset category when the project is deemed to be substantially complete. Substantial completion is when expenses are 88% or more of the estimated budget or if the building is being occupied or if the asset has been placed in service.
Depreciation is not applicable while assets are accounted for as construction in progress.
Collections are works of art and historical treasures that are owned by the University that are not held for financial gain, but rather are held for public exhibition, education, or research in furtherance of public service.
Collections are capitalized at cost or fair market value at the date of acquisition or donation.
Collections are not depreciated.