Appendix B-2. Budgeting Expenditures
Budget Categories - Capital Outlay
Capital Outlay (6100 – 6900)
Classification of an expenditure as capital outlay can be a difficult task. These expenditures result in an acquisition of capital assets or additions to capital assets. These can be expenditures for site, improvement of sites, buildings, improvements of buildings, building fixtures, service systems, and purchase of initial or additional equipment.
Site and Improvement of Sites (6100)
Acquisition of land, improvements of new and old sites and property of a permanent nature attached to land.
Construction or purchase cost of new buildings and additions, including advertising costs, architectural and engineering fees, blueprints, inspection, demolition, razing of old buildings, building fixtures, service systems, and related expenditures.
Equipment (6400 and 6500)
Items of movable property of a relatively permanent nature and/or of significant value (i.e., greater than $5,000). Account 6500 is used for replacement of equipment.
To differentiate between Supplies and Capital, use the following six test questions as a guide. If the answer to any question is “yes,” then the item is not capital, but rather, is a supply item:
- Does the item lose its original shape and appearance with use?
- Is it consumable, with a normal service life of less than two years?
- Is it easily broken, damaged, or lost in normal use?
- Is it more feasible to replace it with an entirely new unit than to repair it?
- Is it an inexpensive item, having the characteristic of equipment?
- Does the small unit cost make it inadvisable to capitalize the item?