University of Washington Policy Directory

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*Formerly part of the University Handbook
Administrative Policy Statement

Construction Capitalization Policy

(Approved by the Senior Vice President for Finance and Facilities by authority of Administrative Order No. 9)

1.  Policy

In accordance with Generally Accepted Accounting Principles (GAAP), the state Office of Financial Management's State Administrative and Accounting Manual (SAAM), the National Association of College and University Business Officers (NACUBO) guidelines, and the federal Office of Management and Budget (OMB) Circular A-110, University policy requires that capital expenditures be treated as follows:

A.   Land

All land should be capitalized. This includes land use rights with indefinite lives acquired with the purchase of the underlying land, and ancillary costs.

B.   Infrastructure

Infrastructure, with a cost of $250,000 or greater, should be capitalized. Examples of infrastructure assets include roads, sidewalks, bridges, tunnels, drainage systems, water and sewer systems, dams, and lighting systems.

C.   Buildings

Buildings, with a cost of $250,000 or greater, should be capitalized.

D.   Improvements Other Than Buildings

Improvements other than buildings, with a cost of $250,000 or greater, should be capitalized. Examples of improvements other than buildings include fences and retaining walls.

E.   Leasehold Improvements

Leasehold improvements, with a cost of $250,000 or greater, should be capitalized.

F.   Intangible Assets

Intangible assets, with a cost of $1,000,000 or greater, should be amortized. This includes intangible assets purchased or internally developed. Examples include land use rights not acquired with the purchase of land, software, patents, and trademarks that are “identifiable” by meeting either of the following conditions:

  • The asset is capable of being separated or divided and sold, transferred, licensed, rented, or exchanged; or

  • The asset arises from contractual or other legal rights, regardless of whether those rights are transferable or separable.

G.   Equipment, Art, and Library Books

All other capital assets with a unit cost (including ancillary costs) of $2,000 or greater, or collections with a total cost of $5,000 or greater, unless otherwise noted, should be capitalized. Recharge and cost centers may have different capitalization thresholds for internal purposes. For more information, refer to the Recharge and Cost Center Information web page.

H.   Certificates of Participation (COP)

All capital assets acquired with Certificates of Participation (COP) should be capitalized.

2.  Construction Capitalization

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 beyond one year.

B.   Non-Capitalized 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 2.A above.

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

  • Roof repairs and replacements.

  • Repainting.

  • Window replacements.

  • Furniture refurbishing.

  • Alterations and rearrangements which prepare existing space 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 capitalized.

3.  Additional Information

For further information contact the Equipment Inventory Office:

  • Phone: 206-543-4663
  • Campus mail: Box 354966
  • Email:

October 1996; May 5, 2008; October 19, 2012.