Fixed Assets Building Component Depreciation Policy. Index

Fixed Assets Building Component Depreciation Policy Section: Fixed Assets Administration  Number: 55.110  Title: Fixed Assets Building Component Dep...
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Fixed Assets Building Component Depreciation Policy Section: Fixed Assets Administration 

Number: 55.110 

Title: Fixed Assets Building Component Depreciation Policy

Index POLICY            

.100 POLICY STATEMENT  .110 POLICY RATIONALE  .120 AUTHORITY  .130 APPROVAL AND EFFECTIVE DATE OF POLICY  .140 KNOWLEDGE OF THIS POLICY  .150 DEFINITIONS  .160 RESPONSIBILITIES  .170 POLICY PROVISIONS  .180 BUILDING COMPONENTS  .190 ALLOCATING CAPITALIZED COSTS TO BUILDING COMPONENTS  .690 CONTACT INFORMATION  .695 HISTORY 

APPENDIX 

.710 BUILDING COMPONENT ASSET TYPE AND USER DEFINED CODES  .995 HISTORY 

Direct questions about this policy to the following offices: Contact 

Subject General questions from institutional personnel

Institution Office of Business  Affairs 

General questions from institutional central administration and  Chancellor's Office personnel 

Chancellor's Office  Controller's Division 

.695 HISTORY

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07/02/04 Approved 12/12/05 Revised 01/19/06 Revised Policy Last Updated: 01/19/06

  APPENDIX  

.710 BUILDING COMPONENT ASSET TYPE AND USER DEFINED CODES Building component records in the Banner Fixed Asset system are identified and categorized by a series of asset type and user defined codes. Use the following table as a reference for selecting the asset type and user defined code when adding a new building component record to Banner Fixed Assets. Asset Type Codes 

Componentized  Buildings 

Major  Improvements  to  Componentize d Buildings 

Gen  Ed ,  Ad mi n,  In str  &  Re se ar ch

Library  M us eu ms 

Gen  Ed ,  Ad mi n,  In str  &  Re se ar ch 

Library  M us eu ms

BUILDING  COMP ONEN T 

ESTIMA TED  USE FUL  LIFE  (in  year s) 

User  D e fi n e d  C o d e

Building  Shell 

  

  

  

  

  

  

  

  

Site 

50 

SP

HG

HL

JG 

JL

GENERAL  COMP ONENT S OF A  BUILDI NG 

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Prepa ration    

Foundatio n 

50 

FD 

HG 

HL 

JG 

JL 

  

Steel  Frame 

50 

SF 

HG 

HL 

JG 

JL 

  

Constructi on  Exteri or 

50 

CE 

HG 

HL 

JG 

JL 

  

Floor  Struct ure 

50 

FS 

HG 

HL 

JG 

JL 

  

Walls‐ Exteri or 

50 

WE 

HG 

HL 

JG 

JL 

  

Roof  Struct ure 

50 

RS 

HG 

HL 

JG 

JL 

Building  Finishe s 

  

  

  

  

  

  

  

  

Roof  Cover 

20 

RC 

OG 

OL 

PG 

PL 

  

Constructi on  Interi or 

20 

CI 

OG 

OL 

PG 

PL 

  

Floor  Cover 

20 

FL 

OG 

OL 

PG 

PL 

Building  Service s  System s 

  

  

  

  

  

  

  

  

Electric 

23 

EL

KG

KL

MG 

ML

  

Heating, 

23 

HV

KG

KL

MG 

ML

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Ventil ation  & AC    

Plumbing 

23 

PG

KG

KL

MG 

ML

  

Fire  Protec tion 

23 

FP 

KG 

KL 

MG 

ML 

  

Elevators 

23 

EV

KG

KL

MG 

ML

Fixed  Equip ment 

  

  

  

  

  

  

  

  

Fixed  Equip ment  20 yr 

20 

FA 

OG 

OL 

PG 

PL 

  

Fixed  Equip ment  15 yr 

15 

FB 

QG 

QL 

RG 

RL 

  

Fixed  Equip ment  10 yr 

10 

FC 

SG 

SL 

TG 

TL 

  

IT &  Netw ork  Infrast ructur e 

10 

FI 

SG 

SL 

TG 

TL 

.995 HISTORY 08/01/06 Approved Appendix Last Updated: 08/01/06  

 

POLICY

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.100 POLICY STATEMENT The following policy provides for the consistent application of building component depreciation and serves as a reference for answering questions relating to building component depreciation. .110 POLICY RATIONALE 1. CRITERIA  

Criteria used in developing building component depreciation include: 

GASB Statements, especially GASB No. 34 Basic Financial Statements and  Management's Discussion and Analysis for State and Local Governments   OMB Circular A‐21 Cost Principles for Educational Institutions  2. OBJECTIVES OF BUILDING COMPONENT DEPRECIATION  

The purpose of building component depreciation is to more accurately measure the annual depreciation of multi-functional academic buildings with significant investments in fixed equipment and infrastructure. Buildings are made up of components with each component having its own useful life. Depreciation is more accurately measured when based on the useful life of each component. .120 AUTHORITY o o o o o o o o

ORS 351.085 ‐ Duties and Powers of Chancellor  ORS 351.090 ‐ Standardization of accounts and Records; Preparation of Budget;  Allocation of Funds  ORS 351.210 ‐ Disposition of Unnecessary Equipment  ORS 351.315 ‐ Borrowing Money for Purchase of Real Property  ORS 351.340 ‐ Use of Moneys  OAR 580‐040‐0005 ‐ Delegation and Assignment of Responsibility  OAR 580‐050‐0015 ‐ Purchases of Real Property  IMD 6.001 ‐ Finance and Business Affairs Accounting Policies ‐ Assignment of  Responsibility 

.130 APPROVAL AND EFFECTIVE DATE OF POLICY This policy was approved by the Controller on July 2, 2004, before the completion of the FY 2004 Closing of the Books, with an effective date of July 1, 2003. Significant changes to the building component depreciation methodology, the building component descriptions, and the building component service lives took place with an effective date of July 1, 2004 for OSU, and July 1, 2005 for PSU and UO.

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.140 KNOWLEDGE OF THIS POLICY All institutional and Chancellor's Office personnel with fixed asset-related responsibilities should be knowledgeable of this policy. .150 DEFINITIONS Building component depreciation refers to allocating the capitalized cost of buildings into a series of components and depreciating each component over the estimated service life of that component. As used in this definition, the word "component" differs from the Banner Fixed Assets terminology of "components" and "attachments." .160 RESPONSIBILITIES University and OUS Controller's Division responsibilities for building component depreciation include the following:

11. UNIVERSITY RESPONSIBILITIES:     Identifying buildings subject to building component depreciation.   Determining the cost of each component through analysis of construction  records for the componentized building.   Recording and calculating building component depreciation in Banner Fixed  Assets and Banner FIS.   Reconciling Banner Fixed Assets to Banner FIS.   Maintaining supporting documentation for all transactions in Banner Fixed  Assets and Banner FIS.   12. CONTROLLER'S DIVISION RESPONSIBILITIES:    Developing accounting policies pertaining to building component depreciation.   Maintaining and updating Banner Fixed Assets validation tables.  

.170 POLICY PROVISIONS OUS institutions with significant organized research programs may componentize some or all academic buildings on their campus to more accurately measure the annual depreciation. Componentized depreciation is based on the useful life of each component. Building component depreciation may only be applied prospectively based on componentizing new buildings and/or applying componentization on the undepreciated portion of existing buildings.

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Building component depreciation is limited to buildings. Building component depreciation does not apply to non-building real property such as improvements other than buildings, infrastructure, land, and land improvements, or to personal property. 13. All OUS institutions will utilize the same components and useful lives for buildings based  on Asset Type, as defined by Banner Fixed Assets.  14. Each OUS institution doing component depreciation shall determine which buildings on  their respective campus will be componentized.  1. When a building is componentized, all previous and subsequent capitalizations  will be componentized.  2. Additions to a componentized building will also be componentized.  3. Capitalized improvements or remodels to a componentized building will also be  componentized.  4. Maintenance, repair and upkeep of each component that neither adds to the  permanent value nor appreciably prolongs its intended life will be expensed and  not capitalized (reference OMB Circular A‐21 J.26). For additional information  on capitalization policy, refer to section 55.100.180 CAPITALIZATION POLICY of  the OUS Fiscal Policy Manual. 

.180 BUILDING COMPONENTS OUS has 19 building components that are grouped into four general components of a building. The four general components and the 19 building components (and their estimated useful life) to be used by all universities for building component depreciation include the following: 

 

GENERAL COMPONENTS  OF A BUILDING 

ESTIMATED  USEFUL  LIFE  (in years) 

BUILDING COMPONENT 

Building Shell 

 

 

  

Site Preparation

50

  

Foundation

50

  

Steel Frame

50

  

Construction Exterior

50

  

Floor Structure

50

  

Walls‐Exterior

50

  

Roof Structure

50

  

 

 

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Building Finishes 

 

 

  

Roof Cover

20

  

Construction Interior

20

  

Floor Cover

20

  

 

 

Building Services Systems 

 

 

  

Electric

23

  

Heating, Ventilation & AC

23

  

Plumbing

23

  

Fire Protection

23

  

Elevators

23

  

 

 

Fixed Equipment 

 

 

  

Fixed Equipment 20 yr

20

  

Fixed Equipment 15 yr

15

  

Fixed Equipment 10 yr

10

  

IT & Network Infrastructure

10

 

.190 ALLOCATING CAPITALIZED COSTS TO BUILDING COMPONENTS For buildings to be componentized, Universities are not required and not expected to split the payment of each invoice into individual building components. Instead, the building's total capitalized cost is to be allocated to the individual building components when the building is recorded in Banner Fixed Assets as a "substantially completed building." "Substantially complete" means receipt of an unconditional certificate of occupancy from the appropriate state and/or local building officials and the majority (i.e. 98%) of the expenditures related to the project have been paid. At the time of recording the asset as a "substantially completed building," Universities will determine if the building is to be componentized. If the building is to be componentized, the actual costs from the schedule of values for that building construction will be used to determine the amount for each of the building components shown above. Addition or capitalized improvement costs will be determined from contractor invoices or the schedule of values. .690 CONTACT INFORMATION

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