Capital Assets
307.01
Capital Assets
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Accounting and Acquisitions - The College records Capital Assets in accordance with Generally Accepted Accounting
Principles (GAAP) in the United States of America and practices prescribed by the
Illinois Community College Board. Capital assets, which will be or are owned by the
College, are recorded at cost or, if donated, at acquisition value at the date of
a gift. The College adds equipment to inventory that, in general, has a useful life
of more than one year and a unit value equal to or greater than $2,500. A non-cash
addition of equipment or property is found or acquired through donation, loan, or
transfer from another entity.
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Capitalization Thresholds and Useful Lives - The College capitalizes all property and equipment that, in general, have a useful
life of more than one year and a unit value equal to or greater than the capitalization
thresholds. Capital assets of the College, other than land, inexhaustible collections,
indefinite-life intangible assets, and construction-in-progress, which are non-depreciable
assets, are depreciated or amortized using the straight-line method over the following
useful lives:
Fixed Asset Dollar Threshold Useful Life (in Years) Land All Non-Depreciable Land Improvements $25,000 20 Buildings $25,000 40 Building Improvements $25,000 20 Infrastructure $25,000 20 Intangible - Software $25,000 5 Intangible - Indefinite Life $5,000 Non-Depreciable Artwork $5,000 Non-Depreciable Equipment $5,000 6 Vehicles $5,000 5 IT Equipment $5,000 4
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Leases - Intangible ‘right-of-use' lease assets are recorded at cost based on the present
value of expected payments over the term of the respective lease term (less any lease
incentives) plus any payments made to the lessor at or before the commencement of
the lease term and certain direct costs that are ancillary charges necessary to place
the lease asset into service. The College will capitalize lease assets (and liabilities)
with an initial measurement equal to or greater than $5,000. The College will amortize
capitalized lease assets using the straight-line method over the shorter of the lease
term or the useful life of the underlying asset (based on the classification in the
table above). A short-term lease is defined as a lease that, at the commencement of
the lease term, has a maximum possible term under the lease contract of 12 months
(or less), including any options to extend, regardless of their probability of being
exercised. The College will recognize short-term and non-capitalized leases as outflows
of resources or inflows of resources, respectively, based on the payment provisions
of the lease contract.
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Subscription-Based Information Technology Arrangements (SBITA) - Intangible ‘right-of-use' subscription assets are recorded at cost based on the
present value of expected payments over the term of the respective subscription plus
any payments made to the SBITA vendor before commencement of the subscription term
and capitalizable implementation costs, less any incentives received from the SBITA
vendor at or before the commencement of the subscription term. The College will capitalize
subscription assets (and liabilities) with an initial measurement equal to or greater
than $25,000. The College will recognize amortization of capitalized subscription
assets as an outflow of resources over the subscription term. Short-term SBITAs have
a maximum possible term under the SBITA contract of 12 months (or less), including
any options to extend, regardless of their probability of being exercised. Subscription
payments for short-term and non-capitalized SBITAs will be recognized as outflows
of resources.
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Collections - Collections are objects held and preserved as a group primarily for education,
research, and/or public exhibition. There are two general types of collections: exhaustible
and inexhaustible. Exhaustible items are “used up” so they are capitalized and depreciated.
Inexhaustible items are maintained indefinitely so they are capitalized, but not depreciated.
Exhaustible collections will be depreciated using the straight-line method over 10
years.
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Capitalizing Assets in the Aggregate - The College will capitalize assets whose individual acquisition costs are less
than the capitalization threshold for an individual asset, but where the aggregate
cost of such identical or similar items exceeds $25,000 at the time of purchase. Assets
meeting these criteria will be capitalized in the aggregate for accounting purposes
and depreciated using the straight-line method over the useful life based on their
classification.
- Effective Date and Transition - This Board Policy shall have an effective date of July 1, 2022. The College's Business Office shall be responsible for transition and implementation of related College procedures.
Revised: 09-25-2023
Cabinet Reviewed: