Capital expenditures are defined to include costs incurred by UBC for the purpose of acquiring, developing or constructing assets, which meet all of the following criteria:
- Held for use in the provision of services, for administrative purposes, for production of goods or for the maintenance, repair, development or construction of other capital assets.
- Intended use on a continuing basis.
- Not intended for sale in the ordinary course of operations.
The cost of capital expenditures is the gross amount of the consideration given up to acquire, construct, develop or better the capital asset, and includes all directly attributable, including installation and other preparation costs required to have the asset ready for its intended use.
For example, if specific training is required to operate a piece of equipment, the training cost should be added to the cost of the equipment when it is purchased.
Cash Basis of Accounting
Under this method of accounting, revenues are recorded when the cash is received and expense are recorded when the cash is paid. This method of accounting is not permitted for external financial reporting purposes under PSAB.
Accrual Basis of Accounting
Under this method of accounting, revenues are recorded when they are earned and expenses are recorded to match the revenues. This method of accounting is required for external financial reporting purposes under PSAB.
Depreciation or Amortization
For purposes of external financial reporting and in accordance with PSAB, the University is required to allocate the cost of capital assets to periods in which the assets are used, to match the revenues that are earned in those periods.