Personal Property Capitalization Threshold Increase

Purpose: 

This Instructional Letter (IL) provides the policy on the increase of GSA’s capitalization threshold for purchases of equipment and related personal property assets from $10,000 to $100,000. Exceptions to this threshold increase that remain unchanged are internal use software capitalization for all Service and Staff Offices, as well as vehicles acquired by the Federal Acquisition Service (FAS) fleet leasing program.

Background:

Raising of the capitalization threshold at this time is due to increases in amounts considered material to GSA’s financial reporting since the threshold was last updated and to reduce the administrative burden of accounting for capitalized assets. 

Applicability: 

The provisions of this IL apply to all Service and Staff Office’s acquisition of equipment and related personal property. This does not apply to property acquired by lease, which is covered under a separate policy. This IL is effective upon issuance and is a prospective change. This IL will remain in effect for one year from issuance, or until amended or incorporated into the 4260.1 Chief Financial Officer (CFO) Manual Volume 1, whichever comes first. 

This IL does not supersede nor change requirements for accountability (particularly management, custody and control) of personal property as defined in 7800.13 Office of Administrative Services (OAS) Management of the General Services Administration’s (GSA) Internal Personal Property.

The following are exceptions to this IL:

1. PBS internal use software remains at a capitalization threshold of $1 million.
2. FAS Fleet Vehicles remain at a capitalization threshold of $10,000.
3. ASF and GSA’s Other Funds internal use software remain at a capitalization threshold of $250,000. 
4. Existing personal property assets recorded as capitalized equipment prior to the issuance of this IL with original cost of less than $100,000 are to continue depreciation for their remaining useful life.

Cancellation: 

This IL supersedes the thresholds related to personal property and equipment listed in 4260.1 CFO Manual Volume 1, chapter 9, paragraph 4.

Summary of Changes:

1. This policy requires capitalization of personal property that meet the following criteria:
   1. acquisition cost of $100,000 or more,
   2. useful life of at least 2 years,
   3. is movable and not classified as real property (personal property not permanently adhered to the physical structure of a building).
2. Group Assets
   1. Capitalization is required for group purchases of assets that collectively cost $100,000 or more per purchase order, contract, or other similar acquisition, and meet the capitalization criteria listed above. Depreciation for group assets is required for financial statement reporting.

Roles and Responsibilities: 

Service and Staff Offices are responsible for executing this policy as outlined below:

1. OCFO
   1. Assigns proper accounting classification coding
   2. Coordinates with regional or staff offices to perform annual asset balance validation
   3. Prepares, reviews and approves the final asset balance validation
2. PBS, FAS and Other Staff Offices
   1. Confirm the existence of the asset during the annual asset balance validation

Please contact April Pratt, Director, PBS Financial Operations Division at april.pratt@gsa.gov, if you have questions related to this document.