Debra:

I'll be brave and take a shot at this, but you have to help me out.

Does this special lighting system go outside?  Could it be considered a
part of the Foundation's plant infrastructure?  If so (to either one,
really) it would probably not be a capital item.  F/GASB has some pretty
strange rules when it comes to things like lighting, roads, sidewalks,
etc.  They may become a part of a proximity building if not considered
infrastructure, or could be expensed altogether.

If the lighting is substantial in relation to the entirety of your
plant, it could be capitalized.  If the lighting is exterior in a
physically isolated area of your campus, it may be capitalizable, and
not considered a part of your infrastructure.

Interior lighting may be an addition to the building if it's in a
"general purpose" area.  It could also be a stand-alone cost of
capitalizable equipment if used in an experiment in a relatively
isolated area of the building.

Of course, all this could be moot if it will all be removed at the end
of the project.  Auditors are taking microscopic looks nowadays on
capital leases (a la, Enron).  A21 also requires a Lease-Purchase
analysis if the lease amount is over $500,000.

I would not charge F&A in any event to the lighting.  I might consider
it for the installation, but I could easily be convinced not to.

Greg Schmidt

Hansen, Debra wrote:

>How would your organizations (i.e. Accounting depts.) handle this situation:
>
>A special type of lighting system, with substantial installation costs, is to be leased over the three year life of a grant.  The lease payment for the lights are being charged on a monthly basis as an expense against the grant.
>
>1.  Do you apply indirect costs to the lease payments?
>
>2.  How do you treat the installation costs:  capitalize or expense?  If you expense them, I would also assume that you would collect indirect costs against this expense as well, correct?
>
>Thanks!
>
>Deb
>
>***************************************************
>Debra K. Hansen
>Director of Sponsored Programs and Fiscal Affairs
>Marshfield Clinic Research Foundation
>1000 N Oak Avenue - 1R3
>Marshfield, WI   54449
>715-387-9130
>xxxxxx@mcrf.mfldclin.edu
>***************************************************
>
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