Furniture and Furnishing for Capital Projects

The capitalization threshold for furniture and furnishings is $5,000. However, when the unit cost of individual items do not meet this threshold and are purchased as part of a construction or major improvement project, their total cost will be capitalized in aggregate when it is $75,000 or more per project and project is > $675,000. (Effective July 1, 2017).

Capital Equipment – Capital equipment (including furniture and furnishings) is defined as tangible personal property (moveable) with a per unit cost of at least $5,000, including acquisition costs of delivery and installation, and a useful life of more than one year.

Major Capital Project – A major capital project is one in which the total cost exceeds $675,000 (excluding the cost of furniture and furnishings) and the purpose of the project increases the useful life of the asset or prepares it for a new purpose.

Following are examples of potential major improvement projects involving furniture:

1. A newly constructed building.
2. A change in the internal design or other physical characteristics of an existing asset to be used for a newly designated purpose. (i.e., changing classroom space into office space or lab).
3. The total or partial upgrading of a location to higher standards of quality or efficiency than originally existed. (i.e., transition of an old research laboratory into one with state-of-the-art furnishings).

When Facilities Management Services (FMS) requests that a new capital project be established, Property Accounting will ask them to provide the total estimated cost of all furnishings associated with the project. In addition to the FMS department/project (18000/8xxxx), Property Accounting will set up the department/project combination of the home department.

• For example, if office in the Controller’s Office were undergoing a major renovation, the main project would be set up under department 18000. However, to facilitate the inventory process, the same project would be set up under department 15000. When the total value of the furnishings exceeds $75,000 (in the aggregate), the requisition would be charged to 01.15000.16259.00.8xxxx.00000.

Note: this policy does not apply to equipment purchases. When the price of an individual unit of equipment is < $5,000, it will be expensed (i.e., charged to object code 84000). When the price is > $5,000, it will be capitalized (charged to object code 16200).

The table below provides information about the correct object code to use when charging costs for furniture and furnishings for capital projects.