Agenda Item No. V. B. 1. a.

Washburn University Board of Regents

SUBJECT: Capitalization Policy for Capital Assets


Washburn has no Board approved policy for the capitalization of capital assets. Construction, renovation, repair and remodeling projects are maintained in the Building Construction Fund (construction in progress) until the project is completed. At June 30 each year, the Director of Facilities Services, the Controller, and the Vice President for Administration and Treasurer review the Building Construction Fund projects and determine the amount to be capitalized.

Beginning with the fiscal year ending June 30, 2003, Washburn University must comply with the requirements of GASB 34 (Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments) and GASB 35 (Basic Financial Statements and Management's Discussion and Analysis for Public Colleges and Universities). GASB 35 requires colleges and universities to depreciate infrastructure, buildings, and equipment capitalized by the institution. Other items will be capitalized, but not depreciated such as land, works of art and historical treasures collections, and construction in progress.

An internet search for capitalization policies of other institutions and governmental entities revealed capitalization limits ranging from $50,000 to $100,000. The capitalization rate for the Kansas Board of Regents institutions for land, nonstructural improvements, infrastructure, building and building improvements is $100,000.

Department heads will continue to be responsible for all assets assigned to their departments.


The new policy to be effective July 1, 2002 is as follows:

The financial records of the University will accurately reflect the ownership by the University of capitalized capital assets in accordance with generally accepted accounting principles adopted by the Governmental Accounting Standards Board (GASB). Capital assets to be capitalized in the financial records of the University include the following:

1. Buildings having an original cost of more than $100,000.

2. Improvements other than buildings having an original cost of more than $100,000.

3. Land without regard to the original cost.

4. Infrastructure having an original cost of more than $100,000.


1. Capital Assets. Land, improvements to land, easements, buildings, building improvements, infrastructure, and all other tangible or intangible assets used in operations having an initial useful life extending beyond a single reporting period.

2. Improvement. An addition made to, or change made in, a capital asset, other than maintenance, to prolong its life or to increase its efficiency or capacity. The cost of the addition or change is added to the book value of the asset.

3. Infrastructure. Long-lived capital assets normally stationary in nature and normally preserved for a significantly greater number of years than most capital assets. Examples of infrastructure assets include roads, drainage systems, sewer systems, lighting systems, utility tunnels, etc.

The University Administration will develop and implement systems and processes to identify capital assets subject to this policy at the time of acquisition or as soon as is practical thereafter. Records will be maintained in a manner adequate to permit identification of the asset, its physical location, its acquisition cost, the depreciation method used, and the accumulated depreciation recorded for each asset.

All expenditures not capitalized will be reflected as an expense on the University financial statements.


In accordance with the requirements of GASB 34 and GASB 35, all capital assets, other than land, valued at less than $100,000 will be expensed in the year of acquisition, and all capital assets with a value of $100,000 or greater will be capitalized and depreciated over its useful life for financial reporting purposes.


President Farley recommends the Board of Regents approve the University Capitalization Policy as previously detailed.

_____________________ _________________________

Date Jerry B. Farley, President

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