General capital assets, consisting of tangible and intangible assets, should be capitalized when all of the following criteria are met:

Tangible Assets

• The asset is tangible in nature, complete and is not a component part of another item.
• The asset is used in the operation of the State's activities.
• The asset has a useful life of two years or more and provides a reasonable benefit throughout that period.
• The individual asset is of significant value (the State will use the following guidelines):
  • All Land
  • Buildings
  • Machinery and Equipment in excess of $40,000
  • Office Furniture and Equipment in excess of $40,000
  • Building and Land Improvements and Renovations in excess of $100,000
  • Library Books in excess of $5,000
  • Works of Art and Historical Treasures in excess of $40,000
  • Infrastructure Assets in excess of $1,000,000

For major construction projects, the $100,000 capitalization limit should apply to the total capital expenditures rather than the individual assets. For bulk purchases of furniture, equipment, etc., the individual assets must exceed $40,000 to be capitalized.

Intangible Assets 

• An intangible asset is an asset that lacks physical substance, is non-financial in nature, and has an initial useful life extending beyond a single reporting period.
• Intangible assets must be identifiable to be reported. They are identifiable if either of the following conditions is met:
  • The asset is separable – capable of being separated or divided from the government and sold, transferred, licensed, rented or exchanged.
  • The asset arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.
• For intangible right-to-use lease and subscription-based information technology arrangement asset capitalization thresholds, refer to Chapter XVI – Section 4.O.
• For other types of intangible assets, the State will capitalize assets with values in excess of $1,000,000.

Guide to Financial Operations

REV. 11/15/2023