Depreciation Method forLeasehold Improvement and Renovation

Buildings and Improvements – Buildings are roofed structures used for permanent ortemporary shelter of persons, animals, plants, or equipment. Buildings consist of twocomponents: original construction and renovations. Original construction is the cost ofthe building and all the detailed components and services necessary to bring thebuilding on line. Renovations are those subsequent construction projects, other thanrepairs, that add value to the building, or extend its useful life, but do not add to theusable space of the structure. An addition includes projects undertaken after theoriginal construction whenever those latter projects add additional square footage tothe original building. Renovations and additions that add to the usable space, prepareexisting buildings for new uses, or extend the useful life of an existing building shouldbe capitalized. Construction in Progress is not depreciated. Depreciation method – straight-line; no salvage value; half-year convention When a building is improved, the improvement must be capitalized as aseparate asset from the original building and assigned its own useful life. Report leasehold improvements (capitalizable improvements to leased buildings)in this category. Depreciate the leasehold improvement over the life of theimprovement or the lease term, whichever is shorter.
Capitalization threshold – $5,000
Useful lives:
Masonry/Concrete Buildings (classroom, office, laboratory) – 40 years
Modular/Metal Buildings – 20 years
Mobile Units – 15 years
Other Buildings – 15 years
Renovations – 25 years
Additions – 40 years