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Capitalization and Depreciation Procedures Policy

Section I


The purpose of this document is to establish a procedure to be followed in capitalizing and depreciating fixed assets for the universities under the control of the Board of Regents of Oklahoma Colleges.

Section II


The following capitalization procedures will be applied to fixed assets as defined by the Financial Accounting and Reporting Manual for Higher Education (FARM).

Land - Capitalized at cost. Land and structures purchased or donated together will be separated when possible and capitalized separately. Cost of preparing the land for use will be capitalized, when material, along with the cost of the land.

Buildings - Capitalized if $25,000 or more and a life expectancy of at least 10 years. Additions and renovations will be capitalized if (a) the cost of the project is $25,000 or more, and (b) the renovation extends the useful life of the facility or modifies and/or upgrades a building, i.e. installation of updated fire alarms, removal of handicapped barriers, etc.

Improvements other than buildings - Capitalized if $5,000 or more. Examples are parking lots, sidewalks, fiberoptics, etc.

Equipment - Capitalized if (a) cost is $2,500 or more, (b) useful life exceeds one year, and (c) not an integral part of another unit. Due to the aggregate value and mobility of computer equipment and multimedia projectors, they will be capitalized if cost exceeds $500. Software is capitalized only if the useful life exceeds five years and the cost is $5,000 or more. All items capitalized must be tagged or otherwise properly identified as property of the University.

Library books - Capitalized at cost if the item becomes a part of the volume count for the library.

Art collections - Inexhaustible collections will not be capitalized. Disclosure will be made in accordance with the FARM.

Assets which are constructed by the University will be capitalized in accordance with the FARM.

Assets other than art which are donated to the University will be capitalized at fair market value.

Section III


Depreciation is recorded on a straight-line basis, mid-year convention, over the estimated useful life of the asset. Useful life will be 40 years for buildings, 20 years for renovations, 10 years for improvements other than buildings, 5 years for equipment, and 5 years for library books.