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shorter period of life or if an architectural or engineering recommendation indicates a more appropriate life expectancy.

1.  Acquisition by construction

Initial capitalization includes initial construction costs of the building structure, including all internal piping, wiring, and permanent fixtures associated with the distribution of utilities within the building.  Cost should also include architect fees, inspection fees and permits, bid advertising, and any interest expense, bond discount/(premium) amortization and insurance costs incurred during the construction period (less investment income earned).  Excludes costs of landscaping, sidewalks, utility tunnels, or furnishings, which are to be capitalized in other fixed asset accounts.  Special purpose machinery and equipment (such as x-ray, sterilizers, presses) installed in the building or structure at the time of construction, which relates to the activity to be conducted in the building or structure, should be capitalized in an equipment asset account rather than the building account.  The cost of constructing a building of less than $500,000 should be charged to expense, unless capitalization/reporting is required by bond or lease purchase agreement covenants.

2.  Acquisition by Purchase

Buildings acquired by outright purchase will be capitalized at acquisition cost with proportionate allocation of the purchase price and associated closing costs allocated to land on the basis of current appraised values.  Additional costs incurred for the purpose of renovating or modifying the building structure in order to place it in service will also be capitalized.  The cost of purchasing a building of less than $500,000 should be charged to expense, unless capitalization/reporting is required by bond or lease purchase agreement

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