Capital - Maintenance - Repair Policy
The criteria used to define a capital asset are: the amount expended and the useful life of the asset. In the case of repairs or alterations to an existing asset, the amount expended and the extent to which the useful life is extended are used. Capital assets include land, land improvements and additions to buildings, equipment and library books.
A capital asset is any tangible item which has a useful life of more than one year. These items are classified as:
- expendable capital - valued between $500 - $4,999 (blue tag)
- capital - valued at $5,000 or more (red tag)
The value of items which can be combined into one unit (CPU, monitor, keyboard = computer) should be added together to determine the total value.
Expenditures normally classified as maintenance that increase the useful life of an asset should be capitalized if they are substantial. Kettering University defines the expenditures on major renovations or additions as substantial if the cost associated with them is in excess of $50,000. Examples of these would be re-paving a parking lot, masonry tuck pointing, etc. Minor expenditures of this nature (less than $50,000) are treated as maintenance or repairs even though they may have the characteristics of capital expenditures. Any group of expenditures which can be classified as creating a new entity, such as the creation of a new lab, should be combined to establish the value of the new asset.
Replacement parts added to equipment for repair purposes should be classified as "Equipment repairs / parts" unless it can be tagged as a stand-alone unit with a value over $5,000 or can be classified as a substantial expenditure as stated in the above paragraph.
Purchase of Capital Items
There have been several situations where faculty have purchased capital items on their personal credit card and then requested reimbursement from their 2/9ths, PDA or RII account. These types of expenditures must go through the regular purchasing procedure so the items may be accounted for properly. A capital item purchase must be made using a purchase order. If you have questions, please contact Purchasing at ext. 9815 or ext. 9808. They will advise the best way to secure the capital item while maintaining proper accountability for the university.
Departments are responsible for tracking all equipment assigned to their area.