Capital Depreciation
Guidelines
Patrick Meyer
21 September 2002
________________________________________________________________
Subject:
Financial Reporting Guidelines for Capital Depreciation
Date: Sat, 21 Sep 2002 11:26:16 -0000
From: Patrick MEYER <pjmeyer@CENATRIN.BF>
To: head-net@tc.umn.edu
Please look below for a summation of responses I received.
----- Original Message -----
From: Patrick MEYER
To: HEAD-NET
Sent: Tuesday, September 17, 2002 11:14 AM
Subject: Request for Assistance-Financial Reporting Guidelines Capital
Depreciation
>>>>>One colleague
suggested getting a copy of the book from A/OS entitled
"Sanity in Finance" for guidelines on how to set up a program
budget. I have my copy on the way to the AISA Admin Conference this
coming week. You might want to ask your regional A/OS representative
about getting our own copy.
Two other colleagues suggested deferring the questions on equipment and
depreciation rates to our auditors since "they relate to generally accepted
accounting practices world-wide."
General responses from the two or three people who took the time to make
specific comments line by line are below.
Dear Colleagues:
We are in the process of finally establishing capitalization and depreciation within
our budget. I am very pleased to be at this stage having to consult with
you regarding guidelines. I need assistance in clarifying how to
distinguish from capital equipment versus supply or maintenance costs.
For example:
1. When you replace the compressor for an
air conditioner, is it a supply item, repair, or equipment?
>>>>>>>Put under annual plant maintenance with a category
for equipment, and a sub-category for general service and repairs.
2. When you construct speed bumps, is it construction or depreciable items?
>>>>>>>>>Construction under capital improvement.
3. What rules do you set for determining whether an item is equipment? Is
it value? What value(s)? Durability?
>>>>>>>>Equipment is durable equipment that depreciates
over time; e.g., furniture (usually 5 years), computers (usually 3 years); Lab
Equipment, vehicles, etc. Auditors should be able to provide guidelines
for you.
4. What categories of equipment are there?
>>>>>>>>Under equipment, you would have
sub-categories: instructional; office; custodial; vehicles; general
service & repairs; and school maintenance.
5. What rules do you set for determining for how long you depreciate items, and
at what rate per year per category?
>>>>>>>>>>Depends on the item; e.g., computers 3
years, furniture 5 years. Auditor should be able to provide guidelines.
I will share results once I can collate responses. If there are resources
available to which I should refer, I would appreciate learning about them as
well. Thank you very much for your indulgence.
>>>>>>>>>>Even though not many people responded,
I wish to thank those who did, and for taking the time to give helpful
suggestions. With a little more homework, I should be able to set
up an inventory, a depreciation table for it, and include a line in the budget
for realistic figures for both capitalization and
depreciation.
Thanks again.
Pat Meyer
Ouagadougou