APPROVED BY Board of Trustees: June 6, 1992 to be effective June 30, 1992
Revised: May 12, 2000 to be effective July 1, 1999
Revised: February 22, 2001 to be effective July 1, 2000
OBJECTIVE: To define and establish classes and valuation methods for “Investment in Plant” for financial statement purposes in accordance with generally accepted accounting principles; to address methods of maintaining physical control and appropriate subsidiary records over the assets by class.
All long lived assets of significant measurable value will be capitalized in the St. Mary’s College of Maryland financial statements as “Investment in Plant.” An asset will be valued at original cost, which is the consideration given or received, including purchase price, capitalized interest and ancillary charges necessary to place the item in its intended location and condition for use. Donated capital assets should be recorded at their estimated fair market value at the date of acquisition plus ancillary charges. Control measures established will be appropriate to the asset class, value, and sensitivity to misappropriation, and will be cost effective.
1.1 Land is any land or real estate titled to or designated in any manner confirming ownership by the State of Maryland for St. Mary’s College of Maryland. Financing and other costs will be included in the amount capitalized. The Comptroller’s office will establish and maintain records of land owned by the College and the value assigned. Sale of any portion will result in a decrease to the Investment in Plant?Land category appropriate to the cost maintained on the books, allocated in a reasonable manner to the parcel sold.
1.2 Land Improvements: Costs of $50,000 or more of such items as landscaping, grading, septic systems, parking areas, retaining walls, recreational areas, fences, paths, outdoor yard lighting and other improvements which materially increase the land value or life are considered to be land improvements and will be capitalized at full acquisition cost. For financial statement purposes, these amounts will be included in the “Land” component of Investment in Plant.
1.3 Infrastructure: Assets, with a cost of $50,000 or more, which are part of a network of assets that can have service potential for an extended period and that are normally stationary, to include drainage facilities, electrical and telecommunication systems, ductbanks, roads, sidewalks, street lighting, bridges, fire hydrants, sea walls, docks, and water and sewer systems, will be capitalized at full acquisition cost. For financial statement purposes, these amounts will be reported separately as “Infrastructure” under the Investment in Plant component.
1.4 Land Maintenance: Mowing, fertilizing of established plantings, repairing sidewalks or streets, and other similar activities are considered routine maintenance. The related expenditures will not be capitalized for financial statement purposes.
2.1 Buildings: Includes all permanent structures and buildings with cost of $50,000 or more, owned by St. Mary’s College used for operating purposes. New buildings’ capitalizable costs include architecture, engineering, construction, inspection, financing, and other fees. Detailed records will be established and maintained, recording such information as building name, purpose, square footage, acquisition or construction date, contractor, and cost of construction. The value of all fixtures, machinery and other equipment which is permanently affixed to buildings and can not be moved without damaging the buildings (exceeding $1,000 each) is included in the “Building” component of Investment in Plant.
2.2 Building Improvements: Costs of $50,000 or more of significant additions, alterations, renovations or structural changes to the existing facility or structure which materially increase its value or useful life will be considered building improvements. Such costs will be capitalized by increasing the value of the appropriate building in the subsidiary records.
2.3 Building Maintenance: The costs of repairing or painting the interior or exterior of existing buildings is considered routine building maintenance and will not be capitalized in the College’s financial statements. Replacement of major building components, such as roofs, flooring materials or windows, with similar materials which do not increase the structure’s value or useful life is included in the maintenance category; such costs are not capitalizable.
2.4 Leased Real Property: Leased property is capitalized if the total cost of the property exceeds $50,000 and it meets the criteria outlined in FASB Standard No. 13, subject to the provision of other authoritative accounting guidance. The leased property will be valued based upon current generally accepted accounting principles and will be recorded under the “Land” in the Investment in Plant component section of the financial statement.
3.1 Equipment Owned: Including motor vehicles, equipment represents items, or a group of items, which are not permanently affixed in, to, or on buildings having a useful life of two or more years and an acquisition cost of $ 2,500 or more will be capitalized. The value of the equipment will include the invoice price, less discounts, plus any freight or installation cost, if determinable. Supplies or goods which are expected to be consumed or expended by use are excluded.
3.1.1 Equipment which meets the minimum capitalization threshold will be tagged with a unique number identifying the piece as owned by St. Mary’s College. The College will maintain computerized records of such tagged equipment and will conduct a physical verification of them annually.
3.1.2 Equipment which does not meet the capitalization requirements but is especially sensitive to conversion to personal use, such as computing equipment, will be tagged and identified as deemed necessary by various department. Library and Technology Resources will be responsible to track and account for computer acquisitions, transfers and disposals. A quarterly report will be submitted to the Business Office showing the current activity and total amount of computers on hand. The College, however, will not maintain a record of such items on the equipment database supporting the financial statement figure. Planning for acquisition of such equipment will involve budgeting on a line item basis.
3.2 Leased Equipment: Equipment acquired under a capital lease will be reported as a separate component of Investment in Plant in a footnote disclosure to the financial statements if the total cost exceeds $ 2,500 and it meets the criteria outlined in FASB No. 13, subject to the provisions of other authoritative accounting guidance. Valuation will be made as required by current generally accepted accounting principles. Leased equipment will be tagged, entered on the computerized equipment database, and annually verified.
3.3 Library Books and Periodicals: All acquisitions of books and periodicals for the College library will be capitalized at direct acquisition cost, including shipping. The total value expended during a fiscal year will be assigned a tag number and added to the College’s equipment database. Verification procedures established by the library will be used to validate the existence of books and periodicals supporting the booked financial statement figure. Library books and periodicals will be reported as a separate component of Investment in Plant in a footnote disclosure to the financial statements.
3.4 Fine Art: Collections, historical treasures and works of fine art will be capitalized by the College at their cost or fair market value at the date of donation (estimated if necessary). Donations will be received by the St. Mary’s College of Maryland Foundation on behalf of the College. Procedures internal to the Art Gallery and approved by the College’s senior administrators will be used to provide the appropriate degree of internal control over the collection. These capital assets will be reported under “Capitalized Collections” in the Investment in Plant component unit of the financial statements.
3.5 Computer Software: Computer software will be capitalized in accordance with generally accepted accounting principles if the cost is at least $5,000 and has a useful life of more than two years. Due to the effort associated with tracking and recording costs of obtaining and developing computer software, the effective date for this area will be July 1, 2000.
4 Depreciation: In accordance with generally accepted accounting principles for public institutions of higher education and policies of the State of Maryland, St. Mary’s College does not report depreciation for its equipment.