Accounting for Leases

Policy Statement

This policy establishes accounting treatment of lease agreements entered into by the University, both as a lessee and as a lessor.  There are two types of lease classifications: capital and operating.  The proper lease classification is important because it determines the University’s accounting and reporting requirements.  

Reason for Policy

Financial Management of Property, Plant and Equipment

Policy Statement

The University requires that amounts expended for facilities and equipment (in excess of certain thresholds and whether purchased, constructed or leased) be capitalized, depreciated and periodically reviewed for impairment or possible write-off in accordance with Generally Accepted Accounting Principles (GAAP) and regulatory requirements.  The University also requires a physical inventory of certain assets every two years.