Capitalization Thresholds

Asset Depreciation

All depreciation is calculated on a half-year convention in the first year of an asset, and depreciation will be calculated through the month prior to the month of disposal.  For assets purchased prior to January 1st of the current year, the system depreciation will start to calculate depreciation on January 1st of the current year (e.g. assets purchased in October will not start to be depreciated until January).  Assets purchased after January 1st will have the first depreciation accelerated so that the depreciation is calculated as if the asset was purchased on January 1st (e.g. asset purchased in April will have 4 months of depreciation when depreciation is run for April).  The system will record any remaining difference between the cost and accumulated depreciation to the asset gain/loss account (see separate asset retirement business process).

For buildings that were completed during the year, they will not be depreciated until the Construction in Progress (CIP) has been disposed of and the building has been added based on the building componentization has been identified and recorded (see separate asset CIP completion business process).  The system will start to depreciate the asset once entered into the system.  KU uses an external consultant to componentize research intensive buildings in order to accelerate unique building component useful lives and increase related depreciation to be claimed for F&A reporting.  Any differences between the system depreciation and the schedules prepared by the external consultants will require the consultant schedules to be updated.