Capitalization Policy
Temple University maintains two asset capitalization policies for movable and fixed equipment, land, land improvements, buildings and building renovations. One policy is for financial statement purposes and one is for tax purposes. All capitalized assets are assigned an equipment code, and each code carried a depreciable life. The capitalization policies updated July 1, 2007 are defined as follows:
Financial Statement Capitalization Policy
For Financial Statement purposes, including F&A Rate Proposal calculations, the capitalization requirements are as follows:
1. All movable and fixed equipment having a useful life in excess of 1 year and a cost in excess of $5,000 per single working unit. A working unit is defined as a piece of equipment, that when assembled, functions as a stand-alone unit.
2. All land, land improvements, buildings and building renovations having a useful life in excess of 1 year and a cost in excess of $50,000 per CPPM project. A CPPM project is defined as improving and or extending the useful life of the building and which has been specifically approved by the University Campus Planning and Plant Management committee "CPPM".
Tax Capitalization Policy
For the federal form 990 Information Return, including University Funding Obligation calculations, the capitalization requirements are as follows:
1. All movable and fixed equipment having a useful life in excess of 1 year and a cost in excess of $500 per single working unit. A working unit is defined as a piece of equipment, that when assembled, functions as a stand-alone unit.
2. All land, land improvements, buildings and building renovations having a useful life or enhancing the useful life in excess of 1 year and having costs in excess of $500 per project. As distinguished from CPPM project, a project need not be approved by CPPM but must extend the useful life and enhance the value of the asset.
Group
Purchases
Occasionally the University will capitalize a group purchase of similar items, which individually are less than the capitalization amount. Generally these are in the form of work stations with component pieces costing less than $2,500 per unit that, when assembled, functions as a stand-alone working unit. The working units are capitalized as individual units and accounted for as such in the property records.
Depreciation
Temple University depreciates all buildings and equipment by the straight-line method over their useful lives. Useful life is based on the American Hospital Association's estimated useful lives of depreciable hospital assets table, as adjusted, according to Temple University's experience.
Retirement Policy
Assets are retired from the capital asset file when it has been determined that the asset is no longer operable, has been replaced, or is no longer available for use. Notification of retirement is made through annual equipment surveys verified by the using departments and submitted to Cost and Property, Purchasing Surplus Equipment Forms submitted to the Purchasing department and loss or stolen report notifications submitted to the Department of Risk Management.
In addition, for existing assets that have been modified or replaced by a building renovation project, the original cost and accumulated depreciation of the item being replaced is removed from the file. When the actual cost of the asset is not readily determined, an estimated cost is calculated by taking the replacement cost and discounting it back to the original date of the asset.
Responsibility
The Cost and Property department is responsible for the calculation, maintenance and storage of this information.