General capital assets, consisting of tangible and intangible assets, should be capitalized when all of the following criteria are met:
- The asset is tangible in nature, complete and is not a component part of another item.
- The asset is used in the operation of the State's activities.
- The asset has a useful life of two years or more and provides a reasonable benefit throughout that period.
- The individual asset is of significant value (the State will use the following guidelines):
- All Land
- Machinery and Equipment in excess of $40,000
- Office Furniture and Equipment in excess of $40,000
- Building and Land Improvements and Renovations in excess of $100,000
- Library Books in excess of $5,000
- Works of Art and Historical Treasures in excess of $40,000
- Infrastructure Assets in excess of $1,000,000
For major construction projects, the $100,000 capitalization limit should apply to the total capital expenditures rather than the individual assets. For bulk purchases of furniture, equipment, etc., the individual assets must exceed $40,000 to be capitalized.
- An intangible asset is an asset that lacks physical substance, is non-financial in nature, and has an initial useful life extending beyond a single reporting period.
- Intangible assets must be identifiable to be reported. They are identifiable if either of the following conditions is met:
- The asset is separable – capable of being separated or divided from the government and sold, transferred, licensed, rented or exchanged.
- The asset arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.
- For intangible right-to-use lease and subscription-based information technology arrangement asset capitalization thresholds, refer to Chapter XVI – Section 4.O.
- For other types of intangible assets, the State will capitalize assets with values in excess of $1,000,000.
Guide to Financial Operations