Construction Accounting

  1. General
  2. Definitions
  3. Building Capitalization Policy

1. General

    1. The Construction Accounting Department serves as the chief budgetary and fiscal office for all construction projects undertaken by the University. All construction related accounting transactions, including budget requests, invoices and deposits, should be submitted to the Construction Accounting Department. Finance & Accounting procedures should be followed when submitting transaction documentation. Construction Accounting is also responsible for following University Policy regarding capitalization decisions associated with all construction projects. The Construction Accounting Department will maintain the accounting records for construction in progress.

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2. Definitions

    1. Fixed Capital Outlay (FCO) – Real property (land, buildings, fixtures and fixed equipment) including additions, replacements, major repairs and renovations to real property which materially extend its useful life or materially improve or change its functional use and including furniture and equipment necessary to furnish and operate a new or improved facility, when appropriated by the Legislature in fixed capital outlay appropriation category.
    2. Minor Construction – The construction of new facilities (which encompasses the addition of square footage to existing facilities), remodeling and renovation projects costing less than $2,000,000.
    3. Major Construction – The construction of new facilities (which encompasses the addition of square footage to existing facilities), remodeling and renovation projects costing more than $2,000,000.

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3. Building Capitalization Policy

In accordance with statutory provisions and generally accepted accounting principles, the University will capitalize and include in its real property records the following:

    1. The original cost to construct new buildings
    2. The costs related to renovation projects which adds new square footage
    3. The costs to a renovation project which extends the useful life of a component part (i.e. roof, plumbing, electrical, etc.) of the building by two or more years, and meets one or both of the following criteria:
          1. The costs are $250,000 or more
          2. The costs are 25% or more than the original cost of the building. Note: Total costs include all professional fees, contingencies, materials, etc. Excluded costs include tangible personal property and asbestos abatement costs.

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