U.S. Geological Survey Manual

No. OFM 99-04

Date: July 21, 1999

Subject: Capitalization Threshold Change

1. Purpose. The purpose of this Instructional Memorandum (IM) is to update the U.S. Geological Survey (USGS) policy regarding the capitalization thresholds for both personal and real property assets of the USGS. Specifically, this IM establishes a new capitalization threshold of $15,000 for personal property.

2. Background. Survey Manual chapter 408.2 prescribes policies, responsibilities, and procedures for the management of USGS personal property. Survey Manual chapter 427.1 prescribes policies, responsibilities, and procedures for the management of USGS real property. Instructional Memorandum 98-02 published USGS policy for capitalizing personal property with an acquisition cost of $5,000 or greater.

3. Policy. As a result of new Departmental guidelines, the threshold for capitalizing personal property has changed from $5,000 to $15,000. Personal property acquired for less than $15,000 will no longer be recorded in the bureau General Ledger accounts for capitalized assets. It should be noted that this does not change the bureau's policy for accountability of personal property; the accountability threshold remains at $5,000. Also, the policy for capitalizing real property remains the same; real property with an acquisition cost of $50,000 or greater is capitalized and recorded in the bureau General Ledger.

4. Definitions.

   1. Personal property - Any property, except records of the Federal Government and real property.

   2. Real property - Buildings, structures, and land.

   3. Capitalized Property - Non-expendable personal property with an acquisition cost of $15,000 or more, or real property with an acquisition cost of $50,000 or more, which is charged to an asset account (general ledger control account) in the Office of Financial Management. To be capitalized, assets also must have estimated useful lives of one year or more, and are not intended for sale in the ordinary course of operations.

5. Responsibilities.
   1. Acquiring Offices - Responsible for accurately identifying capitalized property during its acquisition and providing this information to the Office of Program Support, so that the value of the asset can be properly recorded. This includes identifying the acquisition with a budget object code (BOC) for capitalized property and, for Remote Data Entry (RDE) sites, acquiring a fixed asset (FA) number in the financial system for the capitalized property.

   2. Office of Financial Management (OFM) - Responsible for defining capitalization criteria and the proper recording and depreciation of all capitalized assets of the USGS. Additionally, OFM will adjust the bureau General Ledger accounts and re-classify as non-capitalized existing fixed asset records with an acquisition cost less than the new threshold level.

6. Procedures. Procedures for acquiring, valuing, and recording assets can be found in SM 408.2.1, the Property Management Handbook (408-2-H), and the Office of Management Services web-site ("http://internal.usgs.gov/ops/oms").

7. Effective Date. This IM is effective upon date of issuance.

8. Cancellation Date. This IM will remain in effect until superseded or canceled. This IM supercedes Instructional Memorandum Number OFM 98-02 on capitalization thresholds.

/s/ John J. Blickley

John J. Blickley, Acting Chief Office of Financial Management