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Business and Financial Policies and Procedures

12.1.9 Determine Capitalization Thresholds

Policy Statement

The University of Illinois System capitalizes all property and equipment that, in general, have a useful life of more than one year and a unit value equal to or greater than the capitalization thresholds.


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To determine capitalization thresholds:

  1. Consult 12.1.2 Classify Equipment and Property to determine the classification of equipment or property.
  2. Consult 12.1.3 Determine the Value of Equipment or Property to determine how to value your equipment or property.
  3. Review the information below to determine capitalization thresholds. Click on a link to open or close it:
  Moveable Equipment
Moveable equipment is capitalized if its value is $5,000 or more.
Inexhaustible collections are not capitalized unless they were already capitalized as of June 30, 1999, when new accounting guidelines went into effect. If a collection qualifies for capitalization, it is capitalized regardless of its value.

Exhaustible collections follow moveable equipment capitalization thresholds for the collection as a whole.
  Intangible Assets
Intangible assets (software, trademarks, patents, easements, and copyrights) are capitalized if purchase or development costs are $250,000 or more. Software and other intangible assets are not subject to capitalization if they are to be leased or sold, used in research and have no alternative uses, or are developed for others under contractual arrangements.
  Real Property
Site Improvements - Material and identifiable site improvement costs must be recorded as a capital asset if the improvement total is $250,000 or more. Immaterial or unidentifiable site improvement costs are either expensed or capitalized as part of building or infrastructure project costs.

All buildings are capitalized if the cost is $250,000 or more.

Remodel/Renovation - Repairs and maintenance are always expensed. A remodeling or renovation project costing $250,000 or more may be capitalized if it meets one of the following three criteria:
  • Significantly increases the efficiency, usefulness, or service life of a building.
  • Involves enhancing or replacing something within the existing structural "footprint" (foundation/number of floors, that is, gross square footage) of a building.
  • Involves an Energy Service Company (ESCO), as described in the Public University Energy Conservation Act (110 ILCS 62), where energy and/or operational cost savings over time are guaranteed, and the contractor/ESCO is obligated to pay the difference if future savings fall short of the guarantee.

The cost of building components removed during renovation is considered fully depreciated. Therefore, an asset's original recorded value is not adjusted for the historical cost of elements removed. Consequently, no effort is made to value and adjust for the cost of components removed during renovation/remodeling.

Replacements - Costs incurred to replace elements of existing assets are capitalized or expensed according to the type of property and its capitalization threshold.

Infrastructure is capitalized if a project's total cost is $1,000,000 or more.

Related Policies and Procedures

12.1.2 Classify Equipment and Property
12.1.3 Determine the Value of Equipment or Property

Additional Resources

Public University Energy Conservation Act (110 ILCS 62)

Last Updated: August 2, 2021 | Approved: Senior Associate Vice President for Business and Finance | Effective: June 2011

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