Northwest University Capitalization Policy

The policy for Northwest University is to capitalize the purchase of any fixed assets that have a useful life of three years or more at the purchase price (or market value at date of receipt of donated capital) plus any additional set up expenditures to put the asset into useful state.

Buildings, Remodeling, and Maintenance Costs

Buildings will be capitalized at the total construction cost of the asset including architect fees, engineering fees, permits, and  interest that was capitalized during the construction period.

Remodeling costs of buildings will be capitalized if the total cost of the remodel exceeds $2,000 and either extends the life of, or enhances the use of the building.  Maintenance costs for buildings will be expensed and remodeling costs that are under $2,000 will be expensed.

Equipment, Furnishings, and Vehicles

Equipment, furnishings or vehicles that have an estimated life of three years or more and cost at least $2,000 may be capitalized.  This minimum applies to each individual asset.  However, Northwest University will capitalize a grouping of smaller priced items if purchased as a related group of assets (e.g. computers for a lab, chairs for a particular office or classroom) when the total for the group of assets costs at least $5,000.

An exception to this provision applies to library acquisitions.  We will capitalize library books by treating all books purchased in one fiscal year as a single asset.  However, library books, and media not having a life of at least three years will be expensed.  Subscriptions will be expensed.

Fixed Assets and Depreciation

This policy also establishes the depreciable lives of fixed assets which will be the estimated useful life of the asset.  Below are guidelines for the listed assets:

  • Land: none
  • Land improvements:  10-50 years (depending on item)
  • Buildings:  30-75 years (depending on construction type)
  • Master Plan:  5-10 years
  • Computers & software:  3-6 years
  • Equipment, furniture & fixtures:  3-10 years
  • Library books:  10-20 years
  • Autos:  3-5 years
  • Vans & pickups:  3-9 years
  • Amortizable assets:  3-10 years (or more depending on item)

Our policy is to depreciate items using these useful lives without any offset for residual value.  It is also our policy to claim one half year’s depreciation in the year the asset is placed into service, regardless of the day in which it is placed in service, except for buildings which will be prorated based upon the number of months in service during the first and last years of use.

Capital Purchase Request Form