AP 6321 Inventory and Capitalization of District Fixed Assets - Administrative Procedures, Chapter 6 Business and Fiscal Affairs

  • Reference: GASB Statement No. 34 and 35, California Education Code Section 35168

Definitions

Capital Assets

Capital assets are long-term assets of the District and include land, land improvements, construction-in-progress, buildings, and equipment

Land

Land is defined as the cost of acquisition, preparation and development of property for building. Land is a non- depreciable asset.

Land improvement is defined as any improvement done to the land costing ≥ $50,000, and is capitalized and depreciated over its useful life.

Buildings

Buildings are defined as the costs associated with the construction or acquisition of a structure. Buildings are depreciated over the useful life of the asset.

Building improvements are defined as any refurbishment costing ≥ $50,000 that extends the useful life or significantly changes the functionality of a building. The improvement cost must be depreciated over its useful life.

Equipment/Furniture/Fixture

Equipment is defined as tangible, non-expendable personal property that has a useful life of more than one year and an acquisition cost of $500 or more per unit.

Inventory Tracking, Depreciation, and Capitalization

AP 6321 sets a threshold of $500 per unit cost for inventory tracking and a threshold of $5,000 per unit cost for the depreciation of capital equipment. Therefore, equipment with an acquisition cost of $500 to $4,999 per unit is tagged and included in the District’s asset inventory, but not capitalized and depreciated. However, equipment with an initial cost of $5,000 or more per unit is not only tagged and included in the District’s asset inventory, but is capitalized and depreciated over the useful life of the asset. Group purchases with individual items < $5,000, but together ≥ $5,000 in a group, is capitalized only if the effect of applying the $5,000 threshold to individual items in the group would eliminate a significant portion of those capital assets. Repairs of equipment/furniture/fixture are capitalizable if they extend the useful life of a piece of equipment or significantly change functionality, and meet the $5,000 threshold requirement.

Adopted: June 2017