Table of Contents
The purpose of this guide is to provide implementing guidance for the U.S. Department of the Interior Real Property Financial Management Policy (RPFMP), as amended in June 2003. (The original policy was issued on April 30, 2003.)
Beginning with the Chief Financial Officers' Act of 1990, the Federal government has passed legislation increasing the financial accountability of Federal entities, including the control, accountability, and financial reporting of real property. The timeliness, accuracy and completeness of real property data are critical to the Department of the Interior's ability to justify its funding requests and to verify its accomplishments. Additionally, this data must pass the test of an annual financial statement audit in order for the Department to maintain an unqualified audit opinion.
The Office of Acquisition and Property Management (PAM), in collaboration with the Office of Financial Management (PFM), prepared this guide to assist you in collecting, documenting, and providing accurate and complete real property inventory and financial data.
Please Note: This guide addresses real property only, i.e., any interest in land, together with improvements, structures and fixtures, appurtenances, and improvements of any kind located thereon.
This guidance supports the requirements of SFFAS Number 3, "Accounting for Inventory and Related Property," SFFAS Number 6, "Accounting for Property, Plant and Equipment" (as amended by SFFAS Numbers 11 and 16), and SFFAS Number 8, "Supplementary Stewardship Accounting" (as amended by SFFAS Numbers 11 and 16). The SFFAS standards can be found at: www.fasab.gov.
Assistant Secretaries, Bureau Directors, bureau financial officers and program managers all have a role in ensuring that real property is properly managed and reported and that real property and financial records are reconciled. The roles and responsibilities below can only be accomplished through close cooperation among all parties. This list focuses on financial-related responsibilities and does not include all responsibilities, e.g., safeguarding assets.
Bureau Directors shall:
In addition to the responsibilities identified in D. below, Assistant Directors – Administration (or equivalent) shall:
Chief Financial Officers of bureaus and offices shall:
Persons who manage real property shall:
The policy was effective upon issuance, April 30, 2003. However,
Early implementation of the RPFMP may be requested by bureaus/offices by following the procedures outlined in IV.E., below.
No, the RPFMP is not retroactive.
Yes, upon approval of the Director, Office of Acquisition and Property Management (PAM), bureaus/offices may be authorized, on a case-by-case basis, a transition period to implement the new real property financial management policy. For example, some bureaus/offices may need a transition period to adjust to monthly reconciliations, establish new systems, train appropriate personnel, etc.
Bureau/office requests to implement a transition period must:
The Director, PAM, will make the final decision on the request.
The Director, PAM and the Director, Office of Financial Management (PFM) will consider granting specific exceptions to the policy based on written request. Only the Director, PAM, may grant exceptions to the policy.
Requests for exceptions to the RPFMP must be submitted in writing by a Bureau/Office Director, and show sufficient and satisfactory reason to support the exception. The request packages must also include an analysis of the impact of the requested exception on the bureau/office financial statement. Requests for exceptions must be submitted to the Director, Office of Acquisition and Property Management at the following address:
U.S. Department of the Interior
1849 C Street, NW, (MS 5512)
Washington, DC 20240
Yes, bureau/office implementation of the RPFMP will be monitored. Among other methods, bureau/office real property management accomplishments will be monitored through reports on a series of related performance metrics.
Bureau ADA's (or equivalent) must submit reports on their bureau's real property management accomplishments in the performance metric areas on a monthly basis beginning October 1, 2003. Reports shall be provided to the Director, PAM. (Refer to Appendix A for the specific performance measurement metrics.)
Real property is any interest in land, together with improvements, structures and fixtures, appurtenances, and improvements of any kind located thereon. The term "real" should be associated with realty, land, or something attached thereto.
Real property falls into the following classes (Refer to Appendix B for detailed definitions of the following property classifications.):
Stand alone restroom facilities, referred to as "Comfort Stations" are classified under "Buildings-Other" in a real property inventory.
For purposes of the RPFMP and this guide, capitalization is the recording of the total acquisition cost of an item in the general ledger of DOI's financial accounts. Once recorded in the general ledger, a capitalized asset is depreciated over the term of its life.
The intent of capitalization in the financial records is to provide an accurate and total reflection of DOI's investment in real property over time and to provide information on operating performance by allocating costs to the periods benefited.
DOI's capitalization threshold for real property is $100,000. The threshold is effective October 1, 2003, and applies to all real property including, roads, modifications, improvements, etc. (However, refer to question #6 below regarding special criteria.)
Capitalization provides a reflection of an investment over time, whereas, expensed goods and/or services reflect expenditures made in which the benefits do not extend beyond the present operating period. Expensed goods/services must be booked in the same period in which the expense was incurred, and they are never accounted for in the general ledger.
Accountability is the maintenance of records of, and control over, assets determined to be important because of their use, value or significance in meeting DOI's mission and fiduciary responsibilities. As defined above, capitalization is the actual recording of the total acquisition cost of an item in the general ledger of DOI's financial accounts. While bureaus/offices have accountability responsibilities for all real property assets, not all real property assets are required to be capitalized. The RPFMP's capitalization threshold of $100,000 for real property does not relieve managers from continuing to exercise accountability for real property items valued at less than $100,000.
Keep in mind, any class of real property must be capitalized if the cost of the asset is $100,000 or greater and it meets other special capitalization criteria. In general, items/assets to be capitalized include:
Special criteria apply in determining whether any specific real property item must be capitalized. The following criteria must be applied:
Any asset that has an estimated useful life of less than two years is not capitalized.
Any asset that has an acquisition cost below the established capitalization threshold is not capitalized.
Yes, the $100,000 capitalization threshold applies Departmentwide. However, bureaus/offices may retain their current capitalization threshold for real property if that threshold is less than $100,000. Bureaus/offices opting to retain their current lower capitalization threshold must provide written notice of their intention to retain the lower capitalization threshold to the Director, PAM and the Director, PFM. Such notice would be prepared as an exception to the RPFMP. (Refer to section IV.D. of this guide for instructions on preparing and forwarding exceptions.) A Bureau Director must receive approval from the Director, PAM prior to implementing a threshold different from the Department's $100,000 threshold.
How does the capitalization policy/threshold apply to new acquisitions of real property?
DOI bureaus and offices must capitalize each real property asset that meets the general capitalization criteria described in section VII.A., above.
How does the capitalization policy/threshold apply to real property assets made up of individual units?
What is a capital improvement?
a capital improvement is a modification to existing real property which:
In most cases, standard operations, repair and maintenance work on real property does not significantly extend the property's useful life or expand its capacity beyond that originally intended. For example, repair and replacement of a broken waterline at a facility would constitute repair and maintenance and would not be capitalized. Whereas, adding a new $500,000 boiler to a facility would constitute a capital improvement because it extends the useful life of the building in which it was installed. Repairs and maintenance are expensed. Capital improvements that meet the general capitalization criteria are capitalized and recorded in the general ledger. (Refer to questions/answers on "Replacements" at VII.B.1.(d.)(1), (2) and (3) below, and section XIII of this guide, "Maintenance,")
To establish whether an asset or capital improvement is to be capitalized, the dollar values for modifications are not added to the value of the original assets. Rather, the asset acquisition and capital improvement are treated as separate transactions and the capitalization criteria are to be applied separately to each transaction.
For example, if the campus of a training facility constructs a sports stadium, the stadium would have to be capitalized separately from other buildings on the campus and should not affect the original value of the entire campus. If a single subsequent modification meets the capitalization criteria, that modification must be capitalized at its acquisition cost.
Where a replacement occurs due to a capital improvement, accounts should be adjusted to remove the cost and accumulated depreciation of the asset replaced. For example, when a facility installs a $500,000 boiler to replace a 30-year old boiler, you would adjust accounts to remove the cost and accumulated depreciation of the 30-year old boiler that has been replaced.
The costs of replacements as part of maintenance are expensed and no change is made to the records of the original asset.
Expenditures for repairs and maintenance are charged to expense, as incurred.
The disposal of a real property asset, i.e., removal of an asset's recorded cost and accumulated depreciation, should be treated separately from any additions or replacements. However, costs associated with disposing of existing property are treated as a component of the capital improvement, e.g., destroying an old parking lot in order to build a new one in its place.
Transfers of property occur only between Federal agencies. The policies covered by the RPFMP apply to transfers both within DOI and between DOI and other Federal agencies. (Transactions with the public or state, local and tribal governments are covered elsewhere, e.g., in related OMB Circulars and bureau/office supplementary guidance.) Capitalization of transfers, like any other real property asset, is contingent on meeting the general capitalization criteria.
In most cases, transfers of real property between Federal entities occur without reimbursement to the transferor for the value of the asset. (NOTE: Incidental payments/ costs associated with the transfer, e.g., documentation, transfer fees, etc., are not considered reimbursement for the value of the asset.)
Transfers without reimbursement are recorded in DOI's accounts at the net book value of the transferor plus all associated incidental costs. If the transferor's net book value for the asset cannot be determined, the estimated fair market value of the property plus all associated incidental costs should be recognized.
The date on which the transferor originally acquired the real property should be obtained for calculation of depreciation. If the original date of acquisition cannot be obtained, it shall be estimated in coordination with appropriate technical and property officials.
Real property transferred without reimbursement to another DOI bureau or location will be recorded as a decrease to the asset and accumulated depreciation accounts of the transferring bureau/office and as an increase to the asset and accumulated depreciation account of the receiving bureau/office at the same amount.
Real property transferred to or from another Federal entity, with reimbursement for the value of the property, is recorded at the amount of reimbursement to the transferor plus all associated incidental costs. (NOTE: Incidental payments/costs associated with the transfer, including documentation, transfer fees, etc., are not to be considered as part of the reimbursement for the value of the asset, rather, they are treated as part of the costs.)
Real property transferred with reimbursement to another DOI bureau or location would generally be recorded on the receiving bureau's books at the amount of reimbursement to the transferor plus all associated incidental costs. CAUTION: Such transfers must be reviewed by PFM and auditors to ensure that DOI's financial records are not adversely affected.
Provided that it meets the general capitalization criteria, real property acquired by donation, through bequest, or confiscation will be capitalized and recorded in the appropriate asset account at estimated fair market value when it is acquired by DOI.
Forfeited real property should be valued at fair market value minus an allowance for any liens or claims from a third party.
Assets built by volunteers at little or no cost to the Government are considered to be donated property.
Seized property, i.e., property taken under law enforcement action, is not considered to be Real Property. Rather, seized assets are to be treated as inventory in accordance with SFFAS #3 until adjudication, at which time disposition is determined.
Real property borrowed from other organizations is not recorded in DOI's financial records. However, appropriate accountability must be maintained for all borrowed property.
Real property loaned to another organization without transfer of title remains a DOI asset.Appropriate accountability must be maintained for all loaned property.
Heritage assets are property, plant and equipment (PP&E) that possess one or more of the following characteristics:
Costs of improving, reconstructing or renovating heritage assets must be expensed in the period in which they are incurred. (Refer to section VII.D. of this guide, "Construction-in-Progress" regarding heritage assets.)
Multi-use heritage assets have both operating and heritage characteristics, however, in a multi-use heritage asset, the predominant use of the asset is in government operations.
Predominant use is defined as more than 50% of the entire building, structure, or land is being used for one purpose. For example, if an office building has 51% of its gross square footage used for storage, its predominant use is a warehouse / storage unit. If more than 50% of land is used for an airfield with some agriculture use, its predominant use would be as an airfield.
All acquisition, construction and renovation costs of multi-use heritage assets that meet the capitalization threshold are capitalized and depreciated.
Earthen structures are composed of earth and similar materials that retain water, e.g., dikes, levees, and ditch plugs.
Subject to the general capitalization criteria (i.e., refer to section VII. A. "Capitalization Criteria"):
If they meet the general capitalization criteria, DOI-funded costs of improvements to buildings, structures and facilities leased by DOI are capitalized.
Useful life is the period of time during which an asset will have economic value and be usable. Useful life is sometimes referred to as the "economic life" of an asset.
The useful life of improvements on leased non-federal buildings cannot exceed the lease term.
Capital Leases and Lease Related Issues.
Certain lease arrangements effectively give a lessee an ownership interest in the leased property. In these cases, the property is capitalized as a DOI asset. A lease is considered to be a capital lease when any one of the following four criteria is met:
The property may be purchased at a bargain price at the end of the lease term; or
The lease term is greater than 75% of the estimated economic or useful life of the property; or
The present value of the minimum lease payments is greater than 90% of the fair market value.
What is a cancelable lease?
A cancelable lease is usually executed for property located in metropolitan areas or areas where the demand for rental space is high. It is a lease that can be terminated without additional compensation by providing notice at least 180 days in advance of the time of moving out. Refer to the termination clause of the lease to determine if it can be canceled.
The information should be disclosed in the financial footnote, which should include information such as the terms of the lease agreement and the effective termination date.
A non-cancelable lease is one where the lessee remains ultimately responsible for the rent for the term of the lease, regardless of whether they move out before the end of the lease term. This usually happens where a tenant initiated termination of operation in a rural area or in a specialized rental space where it would be difficult to find other renters.
Your options to remedy the lease include:
The information should be disclosed in the financial footnote, which should include information contained in the lease contract/lease that allows no provision for cancellation. There should either be a copy of the statement of the agreement/lease or a thorough explanation as to why the lease cannot be canceled.
Even though a space may be designated as "non-cancelable," agencies may nonetheless look to the General Services Administration (GSA), Public Building Service (PBS) to find a backfill tenant for the space. Because the space is designated "non-cancelable," the agency may vacate and return the space to PBS, but PBS will not relieve the agency of the obligation to pay serviced shell rent (including operating costs), the annual amortized cost for tenant improvements, joint use charges, security, and the GSA fee (if the space is leased). These charges will only be removed if PBS finds a backfill tenant, and then only to the degree to which the backfill tenant's rent covers the rent obligation of the vacating agency, net of the tenant improvements provided to the backfill tenant, and net of GSA's fee. During the vacancy period, it may be possible to reduce rent for operating expenses. PBS will add the space to its vacant space lists so that if a backfill candidate is found, the agency's rent losses can be mitigated.
A direct lease is contracted with in-house staff, where the Bureau/Office becomes the lessee.
A non-direct lease is one that the GSA leases for a bureau or one that GSA owns and rents to a bureau. GSA is the lessor and submits rent bills to the lessee bureau. The space rented by GSA is called GSA space or Government-controlled space.
Collateral equipment, also known as installed equipment, includes building-type equipment, built-in equipment, and large substantially affixed equipment, normally installed as a part of a facility project either as part of the original facility construction or a modification. Collateral equipment is considered part of the facility project or structure in which it is installed and shall be included in the value of the project when making the determination as to whether the project meets the capitalization criteria. The cost of replacements of, or additions to the collateral equipment will be treated as either a capital improvement or maintenance, in accordance with the Capital Improvements section of this guide. (Refer to Sections VII. A. "Capitalization Criteria," and section VII.B.1.(c), "Capital Improvements.")
Construction-in-Progress refers to real property assets acquired or constructed over a period of time. For these types of assets, the decision of whether to capitalize the asset should be based on its expected total cost (refer to section IX. "Valuation"). If the cost is expected to exceed the capitalization threshold, costs should be accumulated in the Construction-in-Progress account until the asset is placed in service. If the final cost upon completion does not meet the capitalization threshold, the item will be expensed rather than capitalized at that point.
This is an on-going process. Procedures shall ensure that the costs of facilities projects are capitalized in accordance with capitalization criteria and the related amounts removed from work in progress. A review of the physical completion status of individual facilities shall be conducted with authorized real property officials sufficiently in advance of the end of the fiscal year so that necessary entries can be made to properly reflect their status as of the fiscal year end. Reviews should be completed regularly throughout the fiscal year in order to meet the Department's three-day close out period.
Construction in Abeyance refers to certain long-term construction projects that are suspended for a period of time due to financial, legal, political, or other reasons. A project is considered to be in abeyance when it has been formally suspended and management has taken steps to preserve the project from deterioration pending resumption of construction. At the time it is decided to put a project in abeyance, amounts related to the project recorded in Construction-in-Progress must be transferred to Construction in Abeyance, and presented as a sub-category of Construction-in-Progress. NOTE: Costs to protect the project from deterioration are considered operating expenses and are not capitalized.
Under Federal accounting standards, the costs of improving, reconstructing or renovating heritage assets must be expensed in the period in which the costs are incurred. The cost of Heritage Asset construction or renovation projects will be accumulated in Construction-in-Progress accounts in order to facilitate management of the project. A Construction-in-Progress Contra-Account will be established by the servicing finance office and used to ensure that costs are charged in the proper accounting period.
Invoices are generally recognized in the accounting system when the invoice is received. In addition, there may also be periodic "accruals" to reflect amounts owed at the end of a month or quarter even though an invoice has not been received. For construction projects, upon receipt of the invoice, the financial system would show an increase to Construction-in-Progress ( a Property, Plant, and Equipment account) and an increase in Accounts Payable to Others. The actual payment would just reduce Cash and Accounts Payable. The costs incurred to construct the asset are accumulated in Construction-in-Progress over the life of the construction project. Upon completion, the total cost would be removed from Construction-in-Progress and placed in the appropriate asset account.
Land, Stewardship Land, roads, bridges, trails and related improvements will be accounted for as identified in the following table:
- How are land, Stewardship Land, roads, bridges, trails and related improvements accounted for?
Land, Stewardship Land, roads, bridges, trails and related improvements will be accounted for as identified in the following table:
|Category of Land Improvement||Capitalized||Expensed|
|General PP&E Land - Considered to be permanent and does not depreciated over time||Cost of PP&E land, other than Stewardship Land, is capitalized in bureau financial records. No depreciation is recognized.|
|Stewardship Land- Public domain land and land acquired for use as parks, wildlife refuges, and other similar objectives. Public domain land remains Stewardship Land even if it used for operating purposes. Cost associated with Stewardship Land are not capitalized as assets||Cost of acquiring Stewardship Land is expensed in the period in which the land is acquired|
|Incidental Costs Associated with the Acquisition of Land (e.g., costs to relocate current tenants, demolish unnecessary structures) are considered part of the acquisition cost of the land||Capitalized if associated with General PP&E Land.||Expensed if associated with Stewardship|
|Improvements to Land||Capitalized if the overall capitalization criteria are met|
|Roads, Roadbeds, and Related Property - Accounting treatment of roads and roadbeds is made after considerating of a number of factors, including the nature of the underlying land and pavement material.|
|a. Roadbeds- treated as permanent land improvement.||a. Roadbeds constructed on non-Stewardship Land will be capitalized as a permanent land improvement if it meets the capitalization critieria||a. Roadbeds constructed on Stewardship Land are expensed.|
|b. Paved Roads and Gravel Roads||b. Paved roads and gravel roads are capitalized if general capitalization criteria are me, e.g., if useful life is expected to be in excess of 2 years.||b. Paved roads and gravel roads that do not meet the general capitalization criteria, e.g. useful life of which are not expected to exceed 2 years, are expensed.|
|c. Bridges - meting length and width standards and comply with safety inspection standard at 23 CFR 650, Subpart C. Culvert crossing are not considered to be bridges. (See p. 14 of DOI RPFMP)||c. Bridges are capitalized if the general capitalization criteria are met.|
|d. Roads and Bridges Incidental to Purchase of Land - are not capitalized separately from the land and are added to accountability records at zero value (considered fully depreciated) for maintenance purposes.|
|e Trials - considered to be improvements to Stewardship Land. (Improvements designed to improve or protect Stewardship Land are expensed.) Some trails are heritage assets.||e. Trail earthen in nature and the cost of constructing and maintaining trails are expensed.|
|f. Roads on Stewardship Land - are treated in the same manner as paved and gravel roads on non-Stewardship Land||f. Paved roads and gravel roads are capitalized if general capitalization criteria are met, e.g., if useful life is expected to be in excess of 2 years||f. Paved roads and gravel roads that do not meet the general capitalization criteria, e.g. useful life of which are not expected to exceed 2 years, are expensed.|
- What are land improvements?
Additions to or betterments of real property that enhance its value or involve the expenditure of labor or money and are designed to make the property more useful or valuable as distinguished from ordinary repairs. Maintenance and ordinary repairs may include painting and the repair of roofs, windows, heating systems, lighting, and plumbing equipment and are usually associated with buildings, facilities, and structures. Real property expenditures greater than $100,000 per FY for improvements should be capitalized and expenditures of less than $100,000 per FY should be expensed.
- What are some examples of land improvements?
Physical characteristics may have a significant effect on the value of land. Important physical characteristics of land include location, size and shape, capability of combining sites for increased value of the land, frontage, topography, utilities, site improvements, accessibility, view, and environment. Land improvements may also include grading, landscaping, paving, and utility hookups.Special characteristics that may influence and improve the land value include the type of soil, drainage, climate, crop potential, mineral deposits, wildlife habitats, streams, lakes, distance from populated areas, and potential for recreational use.
Accounting transactions affecting DOI-owned and leased real property, whether DOI- or contractor-held, shall be recorded in general ledger asset accounts in accordance with the DOI Real Property Financial Management Policy.
The standard general ledger accounts for real property are provided below:
Table 2 Standard General Ledger Accounts Real Property
||1711||Land and Land Rights|
|1712||Improvements to Land|
|1719||Accumulated Depreciation - Land Improvements|
|Buildings, Structures, and Facilities
|1730||Buildings, Improvements, and Renovations|
|1739||Accumulated Depreciation - Buildings and Improvements|
|1740||Other Structures and Facilities|
|1749||Accumulated Depreciation - Other Structures|
|172B||CIP in Abeyance|
|172C||CIP Completed But Not in Service|
|199B||Investigations and Development|
|Capital Lease Liability Accounts||2940||Capital Lease Liability|
|690D||Non-Prod Costs - Investment in Non-Fed Phys Prop|
|690W||Non-Prod Costs - Investment in Stewardship Assets|
|690F||Non Prod Costs - Investment in Heritage Assets|
Bureaus must physically verify the presence and condition of all real property assets on a regular basis. All real property (i.e 100%) must be inventoried over a five year period.
The following basic information must be gathered in the course of an inventory:
< >location of items/assets
assessment of utilization of the real property item/assets; and
confirmation of accuracy of subsidiary records
How do I conduct and official physical inventory?
The inventory can be accomplished through visitation, satellite imagery, aerial flight observations, maps, and photography, or other visual observations. The overall objective is to ensure that the records in the bureau/office database are accurate and complete. It is absolutely essential that the testing throughout the year be conducted of the inventories to ensure existence and completeness of the inventory, accuracy of the acquisition dates, depreciation, transfers, etc.
Yes, you can use information gathered from the physical inventories as a basis for meeting the requirements for financial accounting of real property and the GSA Form 1166 report. The information contained in the two types of reports must by consistent. (Refer to Appendix C for information requirements related to the Annual Report of Real Property Owned by or Leased to the United States)
Any real property records associated with Indian Trust activities are subject to guidance provided by the Office of the Special Trustee for American Indians.
The following documentation must be maintained in the official financial records for real property:
Facilities are required to maintain basic documentation that supports the cost of each real property asset, the date the asset was placed into service, the asset's useful life, and any subsequent acquisition including depreciation, addition or betterment, disposal, or transfer impacting the recorded value of the item. The appropriate documentation must be in written form for auditing purposes.
Basic documentation will be maintained at the facility level for the life of the asset and then for three fiscal years after disposal or transfer of the real property asset as required by the Office of the Secretary, Comprehensive Records Disposal Schedule, Record Category E, Procurement and Property.
Title evidence must be maintained indefinitely. The other documents should be maintained as long as the Government owns the property or has recapture rights.
As appropriate, the following documents may also be contained in the real property acquisition file:
Each real property acquisition, addition, improvement, alteration, rehabilitation or replacement is to be treated as a single event. The total cost of each single event should be used to determine whether it meets the capitalization criteria, regardless of when payment is made. If the event meets the criteria for capitalization, all costs incurred in relation to that event, regardless of when they are paid, will be recorded in general ledger accounts. The total cost of a project, e.g., a building, will be considered a single event regardless of whether the work was performed through multiple contracts. (Refer to section VII.A. "Capitalization Criteria.")
Capitalized values of assets purchased or constructed by DOI shall include all costs paid for the property, the value of other assets surrendered in order to obtain the property and all other costs incurred to bring the real property to a form and location suitable for its intended use, i.e., the total cost to DOI. These costs include but are not limited to:
< >amounts paid to vendors or contractors, including fees;
transportation charges to the point of initial use;
handling and storage charges;
labor and other direct or indirect production costs (for assets produced or constructed);
engineering, architectural, and other outside services for design, plans, specifications, and surveys;
acquisition and preparation costs of buildings and other facilities;
an appropriate share of the cost of equipment and facilities used in construction work including depreciation;
fixed equipment and related costs of installation required for activities in a building or facility;
direct costs of inspection, supervision, and administration of construction contracts and construction work;
legal and recording fees and damage claims; and
material amounts of interest costs paid.
How do I assign value to a donation?
Assets donated to DOI are recognized at the fair market value of the property plus any other costs incurred by the Government related to bringing the donated property to a form and location suitable for its intended use. (For examples, see the above listing of costs.)
The value of volunteer time is based on the average hourly earnings of all nonagricultural workers as determined by the Bureau of Labor Statistics, and is updated annually. The DOI uses as its standard for determining volunteer wage equivalents, INDEPENDENT SECTOR, an independent volunteer organization. INDEPENDENT SECTOR takes the Bureau of Labor Statistics figure and increases it by 12 percent to estimate for fringe benefits. In 2002, for example, the dollar value for volunteer time was $16.54 per hour. The current dollar values associated with volunteer time can be found at:independentsector.org/programs/research/volunteer_time.html
The value assigned to real property obtained through capital leases includes all costs directly attributable to making a capital asset available to the lessee, including, but not limited to:
ancillary costs such as delivery and installation charges; and
How do I assign value to a trade-in?
Where capitalized property or collateral equipment is traded for another piece of property or capitalized collateral equipment, the capitalized value of the new asset will be amounts paid plus the net book value of assets traded in.
The capitalized value will be net of discounts taken.
Barter transactions are transactions where both sides relinquish assets other than cash, for example, transactions trading land in different locations is a common barter transaction. Barter transactions will be recognized at the fair market value of property surrendered or property received, whichever is more readily determinable. Property acquired in a barter transaction should be capitalized in accordance with section VII. A."Capitalization Criteria."
Depreciation is a reasonable allowance for exhaustion, wear and tear, and obsolescence, taken by the owner of a property and by which the cost of property is allocated over time. Depreciation decreases balance sheet assets and is also recorded as an operating expense for each period.
Capitalized real property, including buildings, structures and facilities, is depreciated over time in order to allocate the costs of assets to the activities and time periods expected to benefit from the use of the property. Depreciation is an important component of the full cost of activities for financial and performance reporting. In addition, management is expected to consider depreciation along with other cost elements when establishing reimbursable agreements and repayment contracts.
Depreciation is computed using the straight-line method (i.e., a method of depreciation that assumes an asset will lose an equal amount of value each year. It is calculated by taking the purchase price of an asset subtracted by the salvage value and divided by the asset’s useful life.), or other acceptable method as approved by the Director, PAM. Depreciation is calculated and accounted for by recognizing an entry to depreciation expense and accumulated depreciation. (Refer to “salvage value” in question E below.)
Depreciation will be computed and recognized on a monthly basis.
Depreciation of capitalized real property will begin the month that the assets are placed in service.
Salvage value is the expected sale price of an asset at the end of its usefulness to the agency. The portion of an asset’s value assumed to be salvage value is not depreciated.
NOTE: Generally, Federal assets are used as long as possible and are rarely sold by the agency to the public for a price. Therefore, the salvage value of DOI real property is assumed to be $0 unless documentation supporting an expected specific salvage value is included in the asset’s official file.
Yes, land, land rights and permanent improvements to land such as roadbeds do not lose value over time and are therefore not subject to depreciation. No depreciation is recognized for these assets.
Yes, the computation of depreciation on these projects must be determined in accordance with the appropriate statutory, regulatory and contractual terms governing project repayment and would not necessarily be computed on the straight-line method. If statutory, regulatory and contractual terms do not reflect a reasonable useful life, consult with your Bureau Chief Financial Officer to determine the appropriate period. The method for computing depreciation on this type of project and/or its components must be documented and consistently applied within the limits of the statutory and regulatory framework.
In calculating the depreciation of an asset, you must consider its estimated useful life. Useful life applies to assets acquired in new condition. Assets acquired in used condition are depreciated over their expected remaining useful life.
Yes, DOI has made a determination of the standard range of useful lives for the following major asset types. Examples of individual asset types are also provided in the following table. NOTE: If an asset has special considerations or is not listed in the following table, a memorandum from a qualified facility management professional to document an alternative useful life should be placed in the property file or record.
Table 3: Useful Lives of Certain Major Real Property Asset Types
|Classification||Useful Life Range|
|A. Buildings, Structures, Facilities, Improvements, and Renovations.
|B. Capital Improvements, Facility Modifications, Leasehold Improvements.
or expiration of lease,
whichever comes first
|C. Water Projects Subject to User Charges||60-80*|
*The useful lives of components of Water Projects Subject to User Charges shall be determined in accordance with appropriate statutory, regulatory and contractual terms governing project repayment and would not necessarily coincide with the range stated above. If statutory, regulatory and contractual terms do not reflect a reasonable useful life, consult with your financial management office to determine the appropriate period. The method of estimating the useful life of this type of project and/or its components must be documented and consistently applied within the limits of the statutory and regulatory framework.
The change in capitalization threshold, from bureau-specific or $50,000 per item acquisition cost in previous years to $100,000 per item in FY 04 and beyond, is not retroactive. All real property placed into service prior to FY 04, with an initial capitalization cost of bureau-specific threshold or $50,000 per item will remain capitalized. All real property placed into service in FY 04 and beyond, with an acquisition cost of $100,000 per item will be capitalized. The useful lives of currently held property need not be changed to reflect the new useful lives effective October 1, 2003. Depreciation is changed prospectively, thus, no change is made to accumulated depreciation reported to date.
Transactions involving the acquisition of real property are to be recognized in the accounting records and official property subsidiary records within ten working days of acquisition, but in no case, later than the last day of the month in which the transaction occurs.
In the case of real property constructed for DOI, it shall be recorded in the general ledger as construction work in progress until it is placed in service by DOI, at which time the balance will be transferred to real property. The authorized government official accepting the property is normally the Contracting Officer or that Officer's designated representative, who is responsible for notifying the Real Property Officer of the acceptance.
Capitalization of construction work in progress will not be delayed pending final acceptance of residual closeout work such as punch lists. At fiscal year-end, special care shall be taken to ensure than any assets meeting the timing of capitalization criteria are capitalized regardless of whether there are remaining costs to be paid. The amount capitalized should be the costs incurred to date that meet the requirements in Section IX, Valuation of the DOI RPFMP and this guide. However, all appropriate costs (as defined in the "Valuation" section), including any unpaid vouchers remaining at the time of acceptance, will subsequently be included in the total cost of the asset since construction of real property is treated as a single event.
Real property assets that no longer provide service in the operation of the entity will be removed from the accounts. Obsolete real property shall be recorded in an appropriate asset account at its expected net realizable value. Any difference in the book value of the PP&E and its expected net realizable value shall be recognized as a gain or loss in the period of adjustment. The expected net realizable value shall be adjusted at the end of each accounting period and any further adjustments in value recognized as a gain or a loss. However, no additional depreciation/amortization shall be taken once such assets are removed from general PP&E in anticipation of disposal, retirement, or removal from service.
Real property assets disposed of, retired or removed from service by DOI will be removed from the real property accounts. The bureau's Real Property Officer shall notify the bureau's Deputy Chief Financial Officer in writing when real property for which DOI is accountable is no longer being used for DOI purposes. Assets to be sold or transferred will be reclassified to another appropriate asset account until sold or transferred. Assets to be disposed of will be written off. The bureau's Deputy Chief Financial Officer shall remove the capitalized cost of the real property and related accumulated depreciation from the accounting records upon receipt of notification. The bureau's Real Property Officer shall also notify his/her respective Deputy Chief Financial Officer in the unlikely event that the real property is returned to active DOI use, so that it can be returned to capitalized status in the accounting records. In this case, the Deputy Chief Financial Officer will initiate actions to return the real property assets to a capitalized status in the accounting records.
When real property has been sold, abandoned, or destroyed, the property must be removed from the property records and an appropriate accounting transaction must be recorded to reflect the disposition of the property and any related gain or loss. The same treatment is necessary when property has been declared excess and accountability transferred to another Federal agency. Cash received as a result of sale or transfer will be handled in accordance with appropriate budget rules. Real property disposal will be accomplished in accordance with Federal Property Management Regulation, 41 CFR, section 101-47.
Transactions are to be recorded when they occur, as discussed above. However, in some cases official paperwork transferring title or documenting acceptance is delayed for an extended period of time. For example, in some cases a building is occupied by employees and used for its intended purpose for several years even though facilities management personnel have not formally accepted the building awaiting final repairs or improvements by the contractor. This building would be considered to be in service and would be recognized as a DOI asset. The following general rule applies: If a building or structure is complete and in use by DOI for its intended purpose, delays in paperwork are not a justification for failure to recognize the asset in official accounts.
Maintenance is the act of keeping assets in usable condition. Maintenance includes preventive maintenance, emergency and scheduled repairs, replacement of parts and structural components, e.g., a roof, HVAC, and other activities needed to preserve the asset so that it continues to provide acceptable services and achieves its expected life.
As pointed out in section VII.B.1.(c)(2) of this guide, maintenance excludes activities aimed at expanding the capacity of an asset or otherwise upgrading it to serve needs different from, or significantly greater than, those originally intended.
As indicated in section VII.B.1.(c)(2), maintenance activities shall be expensed.
Deferred maintenance is maintenance that was not performed when it should have been or was scheduled to be performed and has been delayed for a future period.
Amounts reported for deferred maintenance will be determined using the "Condition Assessment Survey" method.
A Condition Assessment Survey is the periodic inspection of real property to determine its current condition and provide a cost estimate for any necessary repairs.
The following information shall be presented as Required Supplementary Information:
Assistant Directors -Administration (ADA), or equivalent positions in each bureau/office, are responsible for implementing and tracking performance measures for real property management. Real property and financial managers must be aware of the measures and be held accountable for meeting the measures.
To ensure that adequate financial controls are in place and financial records and reports accurately reflect the status of real property.
To improve the Department's real property management program and consistently obtain clean audit opinions on real property financial accounting.
The Bureau ADA is required to report monthly on bureau accomplishments. This is consistent with the requirement for real property and financial management reconciliation that is also required at the end of each month.
|Performance Measures||Performance Objectives|
|X% of implementation with bureaus of Depaertmentwide Real Property Financial Management Policy (DOI RPFMP)||100% = policy has been disseminated, responsibilities have been asigned, reporting processes and frequency have been revised, as appropriate, and data is being collected and reported in accordance with DOI RPFMP|
|X% of bureau's real property accounts reconciled monthly.||Higher percentage is good.|
|X% of changes to real property owned or leased that are tracked and reflected in real property accountability records.||Higher percentage is better.|
|x% of bureau's real property physically inventoried (planned vs. accomplished)||Not less than 20% per year.|
|X% of physical inventory findings requiring corrective actions addressed||Higher percentage is good.|
|# and x% of capitalized property depreciated over previous month.||Must show monthly activity, as appropriate.|
|Average # of days required for recognition of real property transactions in bureau's accounting records and official property records.||Lower # is better should < or = 10 days from acquisition.|
|X% of real property disposed of, retired, or removed from service as reflected in real property accounts and general ledger/previous month.||Must show monthly activity, as appropriate.|
The cost of acquiring, improving, reconstructing, or renovating heritage assets, other than multi-use heritage assets, shall be recognized on the statement of net cost for the period in which the cost is incurred. The cost shall include all costs incurred during the period to bring the item to its current condition at its initial location.
No amounts for heritage assets acquired through donation or devise (a will or clause or a will disposing of property) shall be recognized in the cost of heritage assets. The assets' fair value, if known and material, shall be disclosed in notes to the financial statements in the year received. If fair value is not known or reasonably estimable, information related to the type and quantity of heritage assets received shall be disclosed.
Each bureau must submit real property information annually as follows:
You must report for the Annual Real Property Inventory all land, buildings, and other structures and facilities owned by the United States (including wholly-owned Federal Government corporations) throughout the world and all real property leased by the United States from private individuals, organizations, and municipal, county, State, and foreign governments. These reports must include all real property that a Federal agency carries on its financial statement and/or in documentation accompanying the financial statement, such as:
NOTE: GSA FORM 1166 is an attachment to this Appendix.