University of Washington
Administrative Policy Statements		 Rev/May 5, 2008 61.8

Table of Contents

1. Policy

2. Examples of Noncapitalized Expenditures

3. Additional Information
      

Construction Capitalization Policy

(Approved by the Senior Vice President of Finance and Facilities by authority of Executive Order No. 5)


1.   Policy

University policy, in accordance with generally accepted accounting principles, the Office of Financial Management's (OFM) State Administrative and Accounting Manual, the National Association of College and University Business Officers (NACUBO) guidelines, and the federal Office of Management and Budget (OMB) Circular A–110, requires that construction expenditures be treated as follows:

a.   Capitalized Expenditures

Expenditures should be capitalized if they:

  • Result in additional asset services (expanded facilities);
  • Result in more valuable asset services (upgraded facilities); or
  • Extend normal service life.

b.   Noncapitalized Expenditures

Expenditures should not be capitalized if they:

  • Are incurred to maintain assets in good operating condition; and/or

  • Do not meet the criteria for capitalization as stated in Section 1.a above.

2.   Examples of Noncapitalized Expenditures

The following examples, although not all-inclusive and subject to varying circumstances, are generally considered to be current noncapitalized expenditures:

  • Roof repairs and replacements.

  • Repainting.

  • Window replacements.

  • Furniture refurbishing.

  • Alterations and rearrangements which prepare existing facilities for new purposes.

  • Replacement projects which cost less than $250,000 and are not equal to ten percent of the replacement value of the asset.

  • Replacement floor and window coverings, such as: linoleum, tile, carpets, blinds, and drapes. Such costs associated with new construction, however, are capitalizable.

3.   Additional Information

For further information contact the Equipment Inventory Office:

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