Policies & Procedures Manual - Elizabeth City State University

400.1.47AdditionsAdditions increase the physical size or operating capabilities of an asset through expansion orextension. Additions do not involve renovations. A new wing to a building is an example of anaddition. Additions are considered separate assets. The addition is capitalized if its cost exceeds$5,000. Additions valued below $5,000 are expensed (like other inventoried assets) and are neithercapitalized nor depreciated (if applicable) for financial presentation purposes. The differencebetween additions and maintenance costs is that additions add future benefits while maintenancecosts are incurred to keep the original asset in its normal operation condition.Maintenance CostsIf costs are incurred to kept e asset in its normal operating condition and the life of the asset is notextended, do not capitalize the costs. Maintenance Costs should be expensed, or written off with theyear's expenses. For example, engines in some of the university's Motor Fleet are rebuilt afterseveral seasons. This was an expected costs at the time of purchase. It does not extend the life ofthe asset longer than originally intended, so the costs are expensed.Asset ReconciliationFixed assets should be reconciled monthly by the Fixed Assets Officer and the AccountingDepartment. The Capitalized assets recorded on the fixed assets system should be balanced to theassets recorded on the general ledger. Any differences must be researched and resolved. Thereconciliation must be documented and remain on file in accordance with record retention policies.Missing AssetsIf any assets (inventoried or capitalized) are missing during the Physical Inventory, a Missing AssetForm should be completed to document the reason for the missing asset. This form is reviewed bythe responsible supervisor and or Department Head, the Vice-Chancellor with jurisdiction over theDepartment, the Fixed Assets Officer, and the Vice-Chancellor for Business and Finance. TheVice-Chancellor for Business and Finance will provide a Summarized Listing of all Missing Assetsto the Chancellor at least semi-annually. The Office of the State Controller will periodically reviewitems classified as missing assets. Every effort must be made to find the asset. All efforts must bedocumented and reviewed by the managers listed above.