Home » Financial Policies » 1004.2 Depreciation of Land Improvements, Buildings, Equipment, and Books

1004.2 Depreciation of Land Improvements, Buildings, Equipment, and Books

Subject Area: Accounting
Responsible Office: Financial Services
Sponsor: Associate Vice President for Finance
Originally Issued: July 1988
Revised: June 30, 2006, January 2010, June 2012
Refer Questions To: James Ribikawskis, 773-702-3690


Purpose: A provision for depreciation is recorded in the Financial Accounting System to reflect the net asset value of land improvements, buildings, equipment, and books throughout the useful life.

Policy

1. Depreciation on capitalized assets will be calculated in accordance with applicable financial accounting pronouncements.

2. Land improvements, buildings, equipment, and books will be depreciated using the straight line method over the following useful lives:

Land

Description Years Useful
Land Improvements – general 20
Land Improvements – handicap accessibility 20

Infrastructure

Description Years Useful
Utility Systems – steam lines, chillers 20
Utility Systems – electric vaults, electric loops 20
Telecommunications Systems 5

Componentized Building and Renovation

Description Years Useful
Excavation and Backfill 60
Exterior Walls and Foundations 60
Framing 60
Floors 60
Roofs 40
Partitions and Interior Finishes 25
Electric System 20
Plumbing System 25
Heating and Air-Conditioning System 20
Sprinkler System 25
Elevators, Escalators, and Other Fixed Equipment 25
Windows, Window Replacements 25
Construction Exterior 30
Alarm & P.A. Systems 20
Non-Componentized Renovation Projects 25
Non-Componentized Buildings 45
Capitalized Interest 30

Equipment

Description Years Useful
Scientific and Technical 10
Constructed Scientific and Technical 10
Computer and Software 5
Telecommunications 5
Office and Educational 5
Furniture and Fixtures 10
Shop Machinery and Tools 10
Vehicles 3
Miscellaneous Equipment 7
Library Books 10

3. If equipment is acquired in the first half of the fiscal year, a full year’s depreciation is recorded in the first year. If the asset is acquired in the second half of the fiscal year, no depreciation is recorded in that fiscal year.

4. A full year’s depreciation will be recorded for buildings under $25 million, building renovations, land improvements, leasehold improvements, and books in the year they are capitalized.

5. Depreciation of newly constructed buildings over $25 million will commence in the month the building is placed into service and/or occupied.

6. Leasehold Improvements (see Financial Policy No. 1009.2) will be depreciated using the straight line method over the remaining life of the lease or the useful life of the improvement whichever is shorter.