Capital asset accounting is the set of financial processes through which we record and report on the purchase, maintenance, and disposal of tangible capital assets.
As a public institution, UBC adheres to the Public Sector Accounting Standards (PSAS) for capital accounting.
In February 2020, in response to a request from the Board of Governors, a working group was established by the Office of the Comptroller to assess current practices associated with UBC’s capital accounting process, capital asset registry, and capital reporting. The UBC Tangible Capital Asset Accounting Principles were developed by the working group in fulfillment of their mandate, and approved by the Board of Governors in September 2020.
Purpose
The purpose of these principles is to establish the accounting treatment for the purchase, maintenance, and disposal of tangible capital assets at UBC. The guidelines help to clarify the distinction between operating expenditures and capital expenditures, and to achieve consistency of capital accounting across all departments and units of UBC.
These principles apply to all tangible capital assets, including land, buildings, equipment, and software either acquired or developed for internal use.
These principles do not cover intangible assets and unrecognized assets. Intangible assets include copyrights, intellectual property, and patents. The major categories of unrecognized assets include works of art and historical collections, and mineral resources.
The principles apply to departments in all faculties and administrative units across UBC.
The capital accounting process is now contained within Workday.
The Principles
The guidelines included within the UBC Capital Assets Accounting Principles document should be used to distinguish between operating expenditures and capital expenditures, and to achieve capital accounting consistency related to expenditures incurred across UBC.
UBC Capital Assets Accounting Principles
Tangible Capital Assets
Tangible capital assets are defined as those items that meet all of these criteria:
- Have a useful life expectancy of greater than one year
- Are held for the purpose of rendering a service rather than for sale or immediate consumption
- UBC acquires ownership of a tangible asset
- Have a unit cost exceeding the thresholds listed in Appendix 1 (see table below).
| Category | Capitalization Threshold | Useful Life |
|---|---|---|
| Site improvements | >=$50,000 |
|
| Buildings | >=$50,000 |
|
| Building renovations | >=$50,000 | Remaining life of the building |
| Leasehold improvements | >=$50,000 | Lesser of the lease term or the remaining lease term |
| Network and server hardware | >=$50,000 | 7 years |
| Major software | >=$50,000 | 5 years |
| Enterprise systems | >=$50,000 | 10 years |
| Furniture, equipment, and audio and video hardware | >=$5,000 | 8 years |
| Vehicles | >=$5,000 | 5 years |
| Library books | >=$1,000 | 10 years |
| Computer hardware | >=$1,000 | 3 years |
| Work-In-Progress (WIP) | Same as associated asset class | No amortization taken until WIP transferred to asset |
Betterments — enhancements to the service potential of a tangible capital asset — are also included. For example:
- An increase in the previously assessed physical output or service capacity
- A reduction in associated operating costs
- An extension of the estimated useful life
- An improvement in the quality of output
Installation Services Spend Categories
Tangible capital assets often include an installation service cost. Please use the following guidance for spend category selection:
- If the installation costs are provided by a Canadian supplier, use the same capital spend category as the capital asset purchased.
- If the installation costs are provided by a non-resident supplier, use the spend category, ‘Capital Installation Services – Non-Resident’ in conjunction with one of the following tangible asset categories:
- Equipment | Between $5,000 and $100,000 single piece of equipment
- Equipment | Over $100,000 per Unit Cost
- Artwork and Artifacts
See Non-Resident Withholding Taxes for information about taxes withheld by UBC for non-resident suppliers.