7.6 Infrastructure
7.6.1 Infrastructure Definition
(Last Modified on May 1, 2017)
Infrastructure assets are long-lived capital assets that normally are stationary in nature and can be preserved for a significantly greater number of years than most capital assets. Infrastructure assets are often linear and continuous in nature. The capitalization threshold for new infrastructure is $ 1,000,000.
7.6.2 Infrastructure Improvements
(Last Modified on May 1, 2017)
Infrastructure improvements are capital events that materially extend the useful life or increase the value/capacity of the infrastructure, or both. For example, additional lanes may added to a highway or the weight capacity of a bridge could be increased, which increases overall capacity, thus increasing the service level of the infrastructure. Another example would be re-engineering of a heating and cooling plant which produces the same temperature changes at a reduced cost.
Infrastructure improvements should be capitalized and recorded as additions to the value of the infrastructure if the improvement or addition to value is $100,000 or more. The improvement should be depreciated over the remaining life of the asset using the parent/child relationship in PeopleSoft. If the improvement increases the life of the asset, the asset takes on a new useful life.
If the $100,000 was expended intermittently during the year and if the intent of the expenditures are to allow the infrastructure to continue to be used as intended for the originally established useful life, those costs should be considered expenses rather than capital improvements
7.6.3 Maintenance Costs of Infrastructure
(Last Modified on May 1, 2017)
Maintenance costs allow infrastructure to continue to be used during its originally established useful life. Maintenance costs are expensed in the period incurred.
7.6.4 Preservation Costs
(Last Modified on May 1, 2017)
Preservation costs are generally considered to be those outlays that extend the useful life of an asset beyond its original estimated useful life, but do not increase the capacity or efficiency of the asset. Preservation costs should be capitalized if $100,000 or more. Since the useful life of the asset has been extended, the useful life of the asset should be changed.
7.6.5 Depreciation Methodology
(Last Modified on May 1, 2017)
The straight-line depreciation method (historical cost less residual value, divided by useful life) will be used for infrastructure assets.
7.6.6 Capitalization Threshold
(Last Modified on May 1, 2017)
The capitalization threshold for infrastructure is $1,000,000 for major systems ($100,000 for improvements to existing systems). Examples of major systems to be capitalized as infrastructure include:
Road Systems
Examples of costs to be capitalized would include payments, bridges, lighting systems (including traffic control devices) signage, curbs, and sidewalks.
Water Systems
Examples of costs to be capitalized would include distribution lines, fire hydrants, water meters, valves, joints and bends.
Drainage Systems
Examples of costs to be capitalized would include catch basins, storm drains, inlets, pipes, detention/retention facilities (ponds), and junction boxes.
Sewer Systems
Examples of costs to be capitalized would include piping, manholes, laterals, and lift stations
Fiber Optic and Telephone Distribution Systems Between Buildings
Examples of costs to be capitalized would include fiber optic cable and telephone distribution lines.
Waterway Systems
Examples of costs to be capitalized would include canals, wharves, docks, bulkheads, boardwalks and sea walls.
Note: The six major infrastructure systems identified above are not all inclusive. Some institutions may have other infrastructure assets that do not fit into these six categories. Examples could be major electrical lines or hubs, radio and television towers, etc. If management believes that their institution has infrastructure assets that have not been captured in the categories listed above, please contact the system office to discuss capitalization.
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