Capital assets are real or personal property that have a value equal to or greater than the capitalization threshold for the particular classification of the asset and have an estimated life of greater than one year.

Standard capitalization thresholds for capitalizing assets have been established for each asset category.  All University System of Georgia entities are required to use these thresholds for capitalization:

The following are examples of expenditures not to capitalize as improvements to buildings.  Instead, these items should be recorded as maintenance expense.

• Adding, removing, and/or moving of walls relating to renovation projects that are not considered major rehabilitation projects and do not increase the value of the building
• Improvement projects of minimal or no added life expectancy and/or value to the building
• Plumbing or electrical repairs
• Cleaning, pest extermination, or other periodic maintenance
• Interior decoration, such as draperies, blinds, curtain rods, wallpaper, etc.
• Exterior decoration, such as detachable awnings, uncovered porches, decorative fences, etc.
• Maintenance-type interior renovation, such as repainting, touch-up plastering; replacement of carpet, tile, or panel sections; sink and fixture refinishing, etc.
• Maintenance-type exterior renovation, such as repainting, replacement of deteriorated siding, roof or masonry sections, etc.

Capital assets are depreciated over their estimated useful lives unless they are inexhaustible.  All University System of Georgia institutions use the straight-line depreciation method (historical cost less residual value, divided by useful life).  Buildings are depreciated using the parent/child methodology.  Under this methodology, an improvement (the "child") to an existing building inherits the useful life of the original asset (the "parent").  If the improvement increases the useful life of the building by at least 25% of the original life, then the assets for the original parent and children are retired and the net book value of those assets plus the improvement are added as a new building and depreciated over the new useful life.

The Institute follows the guidelines set by the University System of Georgia when determining the useful life of a capital asset.  Here are the typical useful lives used by the Institute:

Please see the Business Procedures Manual for the University System of Georgia.  Section seven is dedicated to capital assets.

Property Control is the department responsible for the equipment inventory.  Please visit the Property Control website for additional information or contact them at am.ask@business.gatech.edu.