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Occasionally, equipment will be purchased under a lease contract, even though it was not the intent to purchase the equipment at the time the lease was negotiated.  Under these circumstances, the equipment should be capitalized at the time the decision is made to purchase and only for the amount of the negotiated purchase price.  Prior year lease payments should not be capitalized.

V.  CONSTRUCTION WORK IN PROGRESS

Construction Work in Progress Account is designed to accumulate all costs incurred in connection with projects undertaken for the construction of renovation of capital assets.  Costs will remain in the Construction Work in Progress Account until the project is complete and the building or other constructed asset is placed in service.  Upon completion of the project, all costs will be removed from the Construction Work in Progress Account and charged to appropriate Building, Land Improvements, and Equipment Accounts in accordance with the Capitalization Policy.

VI. CAPITALIZED INTEREST

Capitalized interest shall be capitalized for both revenue bonds and bonds to be repaid from specific fund sources. Revenue bonds are typically issued by the University of Nebraska and are repaid from housing, parking, athletics, and similar revenues. Bonds that are repaid from specific fund sources are issued through the University of Nebraska Facilities Corporation. These revenue sources include donations and pledges received through the University of Nebraska Foundation, capital appropriations appropriated by the State Legislature, and pledged University revenues and cash balances.

Interest expense is capitalized during the time a project is under construction and begins upon the

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