17.12 Capitalization Policy

Purpose

Rochester University maintains capitalization policies for movable and fixed equipment, land, land improvements, buildings and building renovations. The capitalization policy updated May 31, 2016 is as follows:

Policy

• All movable and fixed equipment having a useful life in excess of three year and a cost in excess of $2,000 per single working unit. A working unit is defined as a piece of equipment, that when assembled, functions as a stand-alone unit.
• All land, land improvements, buildings and building renovations having a useful life in excess of 1 year and a cost in excess of $2,000 per project.

Group Purchases

Occasionally the College 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 $2,000 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. Another example would be individual classroom chairs that individually might be less than $2,000, but taken together would aggregate to an amount in excess of $2,000.

Depreciation

Rochester University depreciates all buildings and equipment by the straight-line method over their expected useful lives.

Retirement Policy

Assets are retired from the capital asset schedule when it has been determined that the asset is no longer operable, has been replaced, or is no longer available for use. Upon approval of the Vice President for Finance and Operations, notification of retirement is made to the Director of Operations and the Controller, and verified annually through annual equipment inventories.

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 capital asset schedule. 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 Operations Department is responsible for annual equipment inventories and the perpetual inventory records. The Business Office is responsible for the maintenance of asset and depreciation schedules.