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SPA Process User’s Guide – Chapter 1 – Introduction to Capital Assets

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Land and Land Improvements

Land Definition

Land is the surface or crust of the earth that can be used to support structures and may be used to grow crops, grass, shrubs and trees. Land is characterized as having an unlimited (indefinite) life.

Land Improvement Definition

Land improvements consist of site preparation and site improvements (other than buildings) that ready land for its intended use. The costs associated with improvements to land are added to the land value.

Acquisition of Land

According to Texas Government Code Section 2204.001–003:

Real Estate Transactions

If the legislature authorizes a real estate transaction involving real property owned or held in trust by the state, the General Land Office (GLO) takes possession and control of the property and negotiates and closes the real estate transaction on behalf of the state (Natural Resource Code Section 31.158).

The GLO may not take possession and control of property under Chapter 2201 of the Texas Government Code if the state agency is ineligible to benefit from the Texas capital trust fund.

Upon notification by the GLO, a state agency initiates the transfer of property in SPA to the GLO. Proceeds from the real estate transaction are entered by the GLO and deposited into the Texas capital trust fund unless the constitution dedicates the proceeds to another fund or the enabling legislation ordering the real estate transaction provides otherwise.

Depreciation Methodology

Land and land improvements are inexhaustible assets and do not depreciate over time.

Capitalization Threshold

All acquisitions of land and land improvements are capitalized.

Examples of Expenditures to Capitalize as Land and Land Improvements: