4.0 Capitalization Policy for Buildings, Space Changes and Major Repairs


4.1 Buildings

4.1.1

All constructed buildings will be capitalized and depreciated over its useful life. The life of the building will be determined by componentizing its material categories.

4.1.2

All purchased buildings will be assigned a life of 32 years. Any land costs associated with the purchase of a building will be separated and not depreciated.

4.2 Space Changes

4.2.1

Space changes that are budgeted under $100,000 will be expensed.

4.2.2

Space changes that are budgeted from $100,00 to $725,000 will be capitalized and depreciated over a twenty year life. If property is leased, the asset is depreciated over the remaining life of the lease.

4.2.3

Space changes that are budgeted over $725,000 will be capitalized and depreciated over its useful life. The life of the project will be determined by componentizing its budget categories. If property is leased, the asset is depreciated over the remaining life of the lease.

4.2.4

Leasehold improvements that are cash outlays from program funds are considered direct expense to the program.
MIT does not recognize this as a capital asset and therefor, there is no depreciation expense charged against it.

4.3 M.R.O.

4.3.1

M.R.O. projects that are budgeted under $100,000 will be expensed.

4.3.2

All M.R.O. projects that are budgeted $100,000 or greater which are upgrades or replacements to the building's structure or central mechanical systems will be capitalized. The life of the projects will be determined by componentizing its budget categories.

4.3.3

M.R.O. projects that are budgeted $100,000 or greater which are repairs to the building's structure or central mechanical systems will be expensed. An example of this would be a repair of a leaking roof that might entail replacing a section of the roof.