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

Vehicles, Boats and Aircraft

Vehicles, Boats and Aircraft Definition

Vehicles, boats and aircraft placed into service for operations with benefits extending beyond one year from date of acquisition. Improvements or additions made (to existing vehicles, boats or aircraft) is capitalized if they meet the capitalization threshold.

Jointly Funded Vehicles, Boats and Aircraft

Vehicles, boats and aircraft paid for jointly by the state and other governmental entities should be capitalized by the entity responsible for future maintenance if ownership cannot be determined.

Depreciation Methodology

The straight-line depreciation method (historical cost minus residual value, divided by useful life) is used for vehicles, boats and aircraft.

Capitalization Threshold

The capitalization threshold for vehicles, boats and aircraft is $5,000.

Examples of Expenditures to Capitalize as Vehicles, Boats and Aircraft

  • Original contract or invoice price
  • Freight charges and Import duties
  • Handling and storage charges
  • In-transit insurance charges
  • Sales, use and other taxes imposed on the acquisition
  • Installation charges
  • Charges for testing and preparation for use
  • Costs of reconditioning used items when purchased
  • Parts and labor associated with the construction of vehicles, boats or aircraft

Note: If incidental items, such as extended warranties or maintenance agreements, are included with the capital asset upon receipt and are not listed as a line item on the purchase order or on the invoice, then the incidental charges are considered a part of the capital asset.