A Project Approval Request (PAR) is required for all construction projects greater than $100K. For more information, see the PAR guidelines.
To determine if the PAR expenses are capital or non-capital in nature, see Appendix C: Flow Chart, Capitalizing Construction Projects in University Policy 3.9, Capital Assets.
One way to distinguish between what is a capital transaction and what is a non-capital transaction is to think about what can be depreciated as an asset, or whether or not it is a consumable item.
These items are non-capital and cannot be depreciated as an asset. The university has a sub-account (NONCA) within the project for these non-capital costs.
Some non-capital costs include:
Fabricated equipment is equipment built on-site, but not purchased in final form. This scenario falls under the purview of Capital Assets.
For further information or assistance regarding this scenario, please review University Policy 3.9, Capital Assets.
In addition, you can also contact Capital Assets.
PLCIP and PLSUCF accounts contain construction (CAPC) and expense object codes. When creating an asset, the construction and expense object codes are reversed and moved to an acquisition (CAPA) object code. If there are non-capital expenses within the project account, the non-capital expenses remain in a NONCA sub-account and will not be capitalized.
The acquisition object code total is capital.
To determine the full cost of a project: Acquisition total + NONCA object codes total = Full project cost. The asset and depreciation are recorded in a PLCAPT account.
Capital Project funding must be available so that Plant Accounting can transfer the balances out of the proper accounts to the capital project accounts at the time the PAR account is approved.
Some issues to be on the lookout for include whether or not the payment is charged to a capital or non-capital account. Different object codes are used for each. Object codes that are construction object codes are those that can only be used in the capital accounts. They begin with 393X. If it is a capital account, then the code cannot be used in anything other than a PLSUCF – noting state-funded projects; and a PLCIP – noting projects funded by other sources.
Payment requests for improvements to a lease that the university has entered into must be added as a leasehold improvement and depreciated for the duration of the lease. The costs must total at least $100,000, and lease agreements that contain improvements paid for by Cornell need to be recorded in a PLCIP account.
The university has established capital project funding guidelines that must be followed. See the Capital Project Funding Guidelines on the Capital Planning Resources page. Also see Internal Borrowing Guidelines for information on effectively using capital resources, including debt financing.
For further information or assistance, please contact Plant Accounting.