Capital (fixed) assets is a long-term tangible piece of property or equipment owned and used by WPI with a useful life of at least 3 years and value greater than $5,000.
The cost of maintenance and repairs should be charged to expense as incurred while significant additions, improvements and betterments are capitalized.
Useful lives of assets:
Examples of capitalized items:
Examples of NOT capitalized items (operating budget):
Process
Certain equipment purchases are included in the annual operating budget and major capital projects are included in the capital budget. Both budgets are approved by the Board of Trustees at the May meeting prior to the start of the fiscal year.
Project setup requirements:
- The fiscal year budget is finalized in May for the following fiscal year.
- A capital project is set up if the budgeted amount is expected to be greater than 75% of the cost of the item that can be capitalized based on guidelines above.
- It is the expectation of the WPI accounting/planning process that projects approved for the fiscal year are worked on and completed within the same fiscal year. Multi-year projects (like new buildings) are budgeted in segments for each fiscal year.
- If there are items on a project that are not going to be capitalized, the accounting team will make adjustments to the correct category.
- Projects are evaluated quarterly throughout the year with a final review at fiscal year-end (July-August) to identify what projects should be closed.
- For any work/projects not completed within fiscal year, new request for re-budgeting is required for the new fiscal/budget year.
Project not started in the fiscal year it was budgeted for will be closed during annual review process (July-August). Such projects need to be re-requested in the following year’s budget process if needed (those projects are not moved to the next year’s budget automatically).