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SPA Process User’s Guide – Chapter 4 – Adding Property and Funds

Adding Construction in Progress (CIP) in SPA

Construction in Progress (CIP) reflects the economic construction activity status of substantially incomplete:

  • buildings and other structures
  • infrastructure (highways, energy distribution systems, pipelines, etc.)
  • internally generated intangible assets
  • additions
  • alterations
  • reconstruction
  • installations

CIP should be used:

  • If the asset under construction meets the capitalization threshold for its asset category;

    and

  • The project is one year or more in length and/or spans two fiscal years.

If your agency receives federal funding and is constructing a building in which the total cost of the project will meet or exceed $1 million, the building is required to be componentized.

Note: Depreciation is not applicable to assets during the period they are accounted for as CIP.

Adding CIP Property

Please refer to the procedure “Adding a New Property Record” in this chapter. When adding property under construction, enter Class Code 090 in the CLA field as outlined in step 13.

CIP projects should be tracked in SPA using one or both of the methods documented below:

  1. Track projects using a single property number. Each project should be represented as a component of that property number. A maximum of 99 projects can be tracked under one property number.
  2. Assign a unique property number to each project.

Updating CIP Property

Please refer to the procedure “Updating Fund Value” in Chapter 5. Examples of expenditures to be capitalized include:

  • Completed project costs
  • Interest accrued during construction (not applicable to governmental funds)
  • Cost of excavation or grading or filling of land for a specific building
  • Expenses incurred for the preparation of plans, specifications, blueprints, etc.
  • Cost of building permits
  • Professional fees (architect, engineer, management fees for design and supervision, legal)
  • Costs of temporary buildings used during construction
  • Unanticipated costs such as rock blasting, piling or relocation of the channel of an underground stream
  • Permanently attached fixtures or machinery that cannot be removed without impairing the use of the building
  • Additions to buildings (expansions, extensions or enlargements)

Disposing of CIP Property

Construction in Progress assets should be reclassified to their appropriate capital asset category when one the following has already occurred:

  • execution of substantial completion contract documents
  • occupancy
  • the asset is placed into service.

Before the asset can be reclassified to its appropriate asset category, the CIP property (or component) must be deleted. Please refer to the procedure “Disposing of a Property Record” in Chapter 6. When disposing of Construction in Progress property or components, enter the disposal method 24 in the DISPOSAL METHOD field. The disposal date used to dispose CIP must be after the date of the last transaction added to the CIP property number.

Adding the Property Once Completed

Once property under construction has been completed and deleted from SPA, it must be added back into SPA using:

  • a new property number
  • the proper class code
  • an in-service date based on when the property was placed in service
  • acquisition method 04 (Constructed Property)

For more information, please refer to the “Adding a New Property Record” procedure in this chapter.

If a building is to be componentized, each component and its related cost should be accounted for when adding the property to SPA. The sum of all components should equal the value of the CIP property (component) deleted.

Note: Additional cost paid on the project after the CIP property number has been deleted in SPA must be added directly to the new property number by adding a new component number or increasing the value.

Example: A university has two separate construction projects in progress as illustrated in the table below. The university receives federal funds. Project A, New Dormitory, must be componentized because the value of the building meets or exceeds $1 million.

Project A – New Dormitory (2,000,000) Project B – Addition to Library ($400,000)
Start Date: 09/01/2001
Proposed End Date: 10/30/2003
1. Adding CIP Property  
  Professional Fees
Class Code 090
$100,000
Start Date: 04/01/2001
Proposed End Date: 12/01/2001
1. Adding CIP Property  
  Cost of Building Permits
Class Code 090
$50,000
2. Adding Cost Property  
  Construction Cost $1,800,000
  Plans/Blueprints
Class Code 090
100,000
2. Adding Cost  
  Construction Costs $300,000
  Professional Fees
Class Code 090
50,000
3. Disposing of CIP Property
Substantial Completion of Contract
Documents: 10/30/2003
Disposal Method 24
$2,000,000
 
3. Disposing of CIP Property
Occupancy: 12/01/2001
Disposal Method 24
$400,000
 
4. Adding the Property Once Completed
Acquisition Method 04
Required to Componentize
 
4. Adding the Property Once Completed
Acquisition Method 04
$400,000
 
Cpnt Class Code Description Value Cpnt Class Code Description Value
01 031 Bldg: Shell $1,000,000 01 030 Non-Componentized Building $400,000
02 043 Elevator 100,000        
03 046 Sprinkler Sys. 100,000        
04 047 Electrical 200,000        
05 048 Roof 200,000        
06 051 Heat/Cooling 300,000        
07 054 Fire Protection System 100,000        
      $2,000,000        
Glenn Hegar
Texas Comptroller of Public Accounts
Questions? Contact statewide.accounting@cpa.texas.gov
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