6.7 Capital Asset Management
It is the policy of Bucks County Community College to maintain accurate records of property, plant, and equipment held and to capitalize, depreciate, and retire these items according to appropriate accounting and regulatory requirements. An item identified as non-expendable tangible personal property with a useful life of more than one year and a cost in excess of $2500 per item is defined as a capital asset. Capital assets must be acquired for use in operations and not for investment or sale.
All capitalized assets are depreciated using the straight-line method over the useful life of the asset class. Asset life is the period of time over which services are expected to be rendered by the asset. The calculation of depreciation should be based on historical cost (capitalized costs). All normal expenditures of readying an asset for its extended use are capitalized.
For financial statement and government reporting purposes, capital assets include land, buildings, equipment, leasehold improvements, capital improvements and betterments of existing assets that extend the life or increase the value or productivity of the asset, construction in progress and leased property classified as capital as defined by GAAP.
Disposal of assets is the responsibility of the Purchasing department in coordination with the Accounting department and the Asset Administrator. Authorization is required prior to the disposition of equipment. After disposal, the retirement of the asset is recorded and the asset record is removed from the fixed asset system.
Pending Board of Trustees approval September 8, 2011 Revised July 1, 2012
Steps
- Determine the Appropriate Cost of the Fixed Asset
- Capitalize Fixed Asset According to GAAP & GASB
- Calculate & Record Annual Depreciation Expense