a

GAO

United States General Accounting Office

Report to Agency Officials

October 2002 FINANCIAL 

MANAGEMENT

Survey of 

Capitalization 

Threshold and Other 

Policies for Property, 

Plant, and Equipment

GAO-03-42

Page i GAO-03-42 PP&E Policy Survey

Contents

Letter 1

Results in Brief 3

Objectives, Scope, and Methodology 5

Background 6

Federal Agency Capitalization Thresholds Have Risen Significantly

and Are Substantially Higher than Private Sector Capitalization 

Thresholds 10

Federal Agencies’ Estimated Useful Lives for Like Assets Are 

Similar 19

Observations 22

Comments and Our Evaluation 22

Appendixes

Appendix I: Objectives, Scope, and Methodology 27

Appendix II: Survey Participants 30

Appendix III: Capitalization Threshold Increases by Federal Agency 32

Appendix IV: Capitalization Thresholds for Personal Property 34

Appendix V: Capitalization Thresholds for Software 36

Appendix VI: Capitalization Thresholds for Real Property 38

Appendix VII: Useful Life Ranges for Personal Property (in Years) 40

Appendix VIII: Useful Life Ranges for Real Property (in Years) 42

Appendix IX: Federal Agency Survey 44

Appendix X: Private Sector Company Survey 56

Appendix XI: Comments from the Department of Agriculture 66

Appendix XII: Comments from the Department of the Interior 69

Appendix XIII: Comments from the National Aeronautics and Space 

Administration 71

Appendix XIV: Comments from the Department of State 72

Appendix XV: Comments from the Department of the Treasury 76

Appendix XVI: GAO Contact and Staff Acknowledgments 79

Tables Table 1: Capitalization Threshold Ranges for Personal Property 14

Table 2: Capitalization Threshold Ranges for Real Property 16

Table 3: Useful Life Ranges for Personal Property 20
Contents

Page ii GAO-03-42 PP&E Policy Survey

Table 4: Useful Life Ranges for Real Property 20

Figures Figure 1: Increase in Capitalization Threshold Levels at Federal 

Agencies 11

Figure 2: Percentage of Federal Agencies and Private Sector

Companies at Various Software Capitalization Threshold

Levels 15

Abbreviations

BOP Bureau of Prisons

DOC Department of Commerce

DOE Department of Energy

DOI-Rec Department of the Interior-Bureau of Reclamation

DOJ Department of Justice

DOT Department of Transportation

FAA Federal Aviation Administration

FASAB Federal Accounting Standards Advisory Board

GAAP generally accepted accounting principles

GSA General Services Administration

NASA National Aeronautics and Space Administration

NOAA National Oceanic and Atmospheric Administration

OMB Office of Management and Budget

PMA Power Marketing Administration

PP&E property, plant, and equipment

PSC Private Sector Council

SFFAC Statements of Federal Financial Accounting Concepts

SFFAS Statements of Federal Financial Accounting Standards

SSA Social Security Administration

TVA Tennessee Valley Authority

USPS United States Postal Service

USDA Department of Agriculture

VA Department of Veterans Affairs 
Page 1 GAO-03-42 PP&E Policy Survey

United States General Accounting Office

Washington, D.C. 20548

A

October 15, 2002 Letr

The Honorable Mark W. Everson

Deputy Director for Management

Office of Management and Budget

Mr. Donald V. Hammond

Fiscal Assistant Secretary

Department of the Treasury

In passing the 1990 Chief Financial Officers (CFO) Act and a range of other 

financial management reform legislation, the Congress has sought to 

overcome the historical lack of reliable, useful, and timely information with 

which to make informed decisions, measure and control costs, manage for 

results, and ensure financial accountability on an ongoing basis. 

The government’s general property, plant, and equipment (PP&E), reported 

at almost $307 billion, net of accumulated depreciation, as of September 30, 

2001, represents approximately one-third of the reported assets on the 

balance sheet of the U.S. government’s consolidated financial statements. 

General PP&E is often referred to as fixed assets, and includes land, 

buildings, equipment, and improvements acquired by the government to be 

used in providing goods and services to citizens.1

 Capitalization threshold 

and useful life policies affect whether and how the costs of acquiring PP&E 

or construction of PP&E are capitalized and allocated through depreciation 

to the periods benefiting from such assets, and are critical to the fair 

presentation of an entity’s financial position and results of operations. 

Excessively high capitalization thresholds can have a significant impact on 

financial reporting by reducing the amount of federal assets that are 

reported on the balance sheet and, most important, by jeopardizing the 

matching of costs to the appropriate period of asset utilization so that the 

cost of programs and operations are properly measured. 

1

General PP&E does not presently include national defense PP&E, which is the PP&E 

components of weapons systems and support PP&E owned by the Department of Defense 

or its component entities for use in the performance of military missions, as well as vessels 

held in a preservation status by the Maritime Administration’s National Defense Reserve 

Fleet. Existing U.S. generally accepted accounting principles requiring that national 

defense PP&E be disclosed separately in financial reports are undergoing change, pending 

final publishing of the Statements of Federal Financial Accounting Standards No. 23, 

Eliminating the Category National Defense Property, Plant, and Equipment, which was 

approved for issuance by the Federal Accounting Standards Advisory Board in June of 2002.
Page 2 GAO-03-42 PP&E Policy Survey

For the past 5 fiscal years, in our audits of the consolidated financial 

statements, we have reported2

 that because the government lacked 

complete and reliable information to support PP&E holdings, we could not 

satisfactorily determine that all assets were included in the financial 

statements, verify that certain reported assets actually existed, or 

substantiate the amounts at which they were valued. PP&E reporting was 

one of the primary reasons for our disclaiming an opinion on the 

consolidated financial statements again in fiscal year 2001.3

 As the 

government continues to make progress in addressing major audit issues, 

such as PP&E reporting, and the prospect of auditable consolidated 

financial statements draws closer, issues such as useful lives and 

capitalization thresholds are now in sharper focus.

Under the Statement of Federal Financial Accounting Standard (SFFAS) 

No. 6, Accounting for Property, Plant, and Equipment, federal agencies 

are to record as property and equipment all items that meet certain 

characteristics, such as a useful life of 2 years or more, and are permitted to 

establish individual capitalization thresholds and useful life policies due to 

their diverse size and uses of PP&E. SFFAS No. 6 was issued in November 

1995 and was effective for fiscal years beginning after September 30, 1997. 

Previously, the capitalization threshold for federal agencies was $5,000.4

We have noted large increases in federal agency capitalization thresholds 

over the past 5 years, and our audit work at two major agencies has 

highlighted problems in this area. In prior audit work performed at the 

Internal Revenue Service (IRS), we found that Treasury’s $50,000 

capitalization threshold contributed to a material understatement in PP&E. 

IRS has since revised its capitalization threshold accordingly. We 

previously raised concerns with the Department of Defense (DOD), which 

2

The Secretary of the Treasury, in coordination with the Director of the Office of 

Management and Budget, is required to annually submit financial statements of the U.S. 

government to the President and the Congress. We are required to audit these statements. 

The Government Management Reform Act of 1994 has required such reporting, covering the 

executive branch of government, beginning with financial statements prepared for fiscal 

year 1997. 31 U.S.C. 331 (e). The government has elected to include certain financial 

information on the legislative and judicial branches in the consolidated financial statements 

as well.

3

U.S. General Accounting Office, U.S. Government Financial Statements: FY 2001 Results 

Highlight the Continuing Need to Accelerate Federal Financial Management Reform, 

GAO-02-599T (Washington, D.C.: Apr. 9, 2002). 

4

Title 2 of the GAO Policy and Procedures Manual for Guidance of Federal Agencies. 
Page 3 GAO-03-42 PP&E Policy Survey

holds the majority of the U.S. government’s reported PP&E, about the basis 

for its $100,000 capitalization threshold, in part because of issues 

surrounding the quality of the data available to make such a determination. 

As an initial step to address this issue governmentwide and as part of a 

series of planned work on key audit issues pertaining to the consolidated 

financial statement audit, we undertook a survey of PP&E capitalization 

threshold and useful life policies at 14 federal agencies that reported 

significant amounts of PP&E. We also surveyed 12 private sector 

companies on these same PP&E policies. Our survey was designed to 

determine the federal agencies’ (1) current capitalization threshold 

practices for PP&E and how such policies compare to the practices being 

applied to PP&E in the private sector and (2) useful life policies and how 

they compare to those used in the private sector. Our survey work was not 

designed to conclude on the reasonableness of the capitalization threshold 

levels being applied by federal agencies. Instead, our survey results are 

intended to provide useful baseline information to responsible parties in 

federal financial reporting. We plan to review the adequacy of 

capitalization threshold levels and useful life policies at selected agencies 

in future work. 

Results in Brief Reported capitalization threshold levels at the 14 agencies we surveyed 

ranged from zero5

 to $250,000.6 Federal capitalization threshold levels have 

risen significantly over the past 5 years. Nine out of the 14 agencies 

surveyed reported that they had at least doubled their capitalization 

thresholds in the past 5 years, for at least one category of property. 

Furthermore, 6 of these 9 agencies’ capitalization thresholds were at least 5 

times higher, with 2 raising the threshold from $5,000 to $100,000, a 20-fold 

increase. Two of the agencies cited materiality7

 as a factor that caused the

5

All PP&E additions would be capitalized.

6

This capitalization threshold range does not include software. Some participants 

responded that they have a separate capitalization threshold for software, which ranged 

from $5,000 to $5,000,000.

7

Materiality is defined in the GAO/PCIE Financial Audit Manual as the magnitude of an 

item’s omission or misstatement in a financial statement that, in light of surrounding 

circumstances, makes it probable that the judgment of a reasonable person relying on the 

information would have been changed or influenced by the inclusion or correction of the 

item.
Page 4 GAO-03-42 PP&E Policy Survey

increase, while 4 identified the implementation of SFFAS No. 6.8 Other 

reasons cited included that the threshold represented a management 

decision or that it was based on the external auditor’s recommendation. 

The vast majority (12 out of 14) of the federal agencies surveyed responded 

that they had performed some type of formal analyses or studies to develop 

or validate the capitalization threshold level. Despite the sharp increase in 

the capitalization threshold, all but 1 of the 14 agencies responded that they 

maintained property records for PP&E not capitalized on the balance 

sheet, citing safeguarding of PP&E and supporting agency operations as 

the key reasons for maintaining such information. 

Federal capitalization thresholds are significantly higher than those 

reported by the private sector entities we surveyed. In some cases, the 

federal capitalization thresholds for real property were up to 50 times 

higher than those noted in the private sector. Interestingly, one of our 

surveyed federal entities, the United States Postal Service (USPS),9

 which 

sets its rates and fees to recover its costs, reported capitalization 

thresholds10 that are in line with the surveyed private sector companies’

capitalization threshold levels. Of the 14 agencies surveyed, capitalization 

thresholds for equipment were as high as $200,000 in the federal 

government, compared to a maximum of $5,000 in the 12 private sector 

companies. 

In contrast to the wide variance between federal agency and private sector 

capitalization threshold policies, federal agency useful life policies were 

generally similar to those found in the private sector. Estimated useful life 

classifications within the federal government ranged from 2 years to 40 

years for personal property and 5 years to 100 years for real property. For 

example, the estimated useful life classifications for computer software 

were within a range of 2 to 10 years for the federal agencies surveyed and 3 

to 10 years for the private sector participants. The estimated useful life 

classifications for motor vehicles were within a range of 3 to 12 years for 

the federal agencies surveyed and 2 to 10 years for the private sector 

8

Prior to the issuance of SFFAS No. 6, the capitalization threshold for all federal agencies 

was limited to $5,000, in accordance with Title 2, of the GAO Policy and Procedures Manual 

for Guidance of Federal Agencies.

9

USPS is an independent establishment of the executive branch, with a goal to operate on a 

break-even basis and cover its expenses almost entirely through postal revenues.

10The USPS capitalization threshold is $3,000 for personal property and $5,000 for real 

property.
Page 5 GAO-03-42 PP&E Policy Survey

companies. We did identify several differences attributable to the variety 

of assets owned by the entities that participated in our survey, rather than 

any systemic differences in useful life classifications. For example, several 

federal agencies in our survey owned assets such as dams, canals, and 

reactors for which they reported useful lives of 50 years or more. However, 

our private sector participants did not include a utility company with 

similar assets for like comparisons. Given the relatively recent 

introduction of consolidated financial reporting in the federal government, 

the appropriate and consistent useful life classification is an area that also 

needs to be periodically reevaluated for impact on financial reporting, 

performance measurement data, and the financial statement audits. 

We received comments on a draft of this report from the Department of the 

Treasury, the Office of Management and Budget (OMB), and 4 of the 14 

federal agencies that took part in our survey. We also received primarily 

editorial comments from 7 federal agency survey participants and 3 private 

sector survey participants. The 3 remaining federal agencies told us they 

had no comments on a draft of this report. In general, the 6 federal entities 

that commented on the draft took issue with any comparison of 

capitalization threshold levels in the federal government to those in the 

private sector and/or our discussion of the wide range of capitalization 

thresholds at the various federal agencies surveyed. 

Certain operating differences and different financial incentives between 

the federal government and the private sector and between various federal 

agencies could account for different threshold levels. At the same time, 

given the wide variance in capitalization thresholds, the sharp increases in 

recent years, and the significant differences from private sector companies 

of comparable size, across government, this issue may have a significant 

effect on the government’s consolidated financial statements. This survey 

was designed to be the first step in analyzing these significant PP&E 

policies and their impact on the financial reports of the U.S. government 

and is being provided as a baseline tool as agencies, Treasury, and OMB 

consider these issues and their impact on financial reporting. 

Objectives, Scope, and 

Methodology

Our work was performed primarily using survey instruments to gather data 

on PP&E policies at 14 selected federal agencies and 12 private sector 

companies. Appendix II provides a list of all survey participants. We also 

held discussions with certain representatives of the participating federal 

agencies and private sector companies in developing the survey and in 

gathering follow-up information based upon the survey responses. We did 
Page 6 GAO-03-42 PP&E Policy Survey

not verify the accuracy of the data provided to us by the survey 

participants. We conducted our work from May 2001 through February 

2002 in accordance with U.S. generally accepted government auditing 

standards. We requested comments on a draft of this report from the 

Department of the Treasury, OMB, all 14 federal agencies that participated 

in the survey, as well as the 12 private sector council member survey 

participants. Further details on our scope and methodology are included in 

appendix I.

Background The Secretary of the Treasury, in coordination with the Director of OMB, is 

required to submit annually to the President and the Congress audited 

consolidated financial statements of the U.S. government beginning with 

those for fiscal year 1997. We are required to audit those statements. The 

principal financial statements required for federal agencies are the Balance 

Sheet, the Statement of Net Cost, the Statement of Changes in Net Position, 

the Statement of Budgetary Resources, and the Statement of Financing. 

These statements are to be prepared in accordance with U.S. generally 

accepted accounting principles. The balance sheet for the federal 

government presents the total balances of assets, liabilities, and net 

position as of a specific point in time. The government’s general PP&E, 

reported at almost $307 billion, net of accumulated depreciation as of 

September 30, 2001, represents approximately one-third of the assets on its 

balance sheet. 
Page 7 GAO-03-42 PP&E Policy Survey

Federal Accounting 

Standards

Federal accounting standards, which agency CFOs use in preparing 

financial statements, are promulgated by the Federal Accounting Standards 

Advisory Board (FASAB).11 FASAB develops accounting standards after 

considering the financial and budgetary information needs of the Congress, 

executive agencies, other users of federal financial information, and the 

public. FASAB forwards the standards to the three principals—the 

Comptroller General, the Secretary of the Treasury, and the Director of 

OMB—for a review period, after which the standards are considered final, 

then published on FASAB’s Web site and in print. The American Institute of 

Certified Public Accountants recognizes the federal accounting standards 

promulgated by FASAB as being generally accepted accounting principles 

(GAAP) for the federal government. Currently, there are 22 SFFAS and 

three Statements of Federal Financial Accounting Concepts (SFFAC).12 

The concepts and standards are the basis for OMB’s guidance to agencies 

on the form and content of their financial statements and the government’s 

consolidated financial statements.

FASAB significantly relied upon SFFAC No. 1, Objectives of Federal 

Financial Reporting, in drafting accounting standards for PP&E. The two 

principle reporting objectives relevant to PP&E are operating performance 

and stewardship. In developing PP&E standards to meet the operating 

performance objective, FASAB established the goal of measuring the cost 

associated with using PP&E and including that cost in entity operating 

results. In seeking to fulfill the stewardship objective, FASAB developed 

the PP&E accounting standards to result in reporting information on 

(1) asset condition, (2) changes in the amount and service potential of 

PP&E, (3) the cost of PP&E where applicable, and (4) spending for 

acquisition of PP&E versus noncapital spending. 

Capitalization Thresholds 

and Estimated Useful Lives

Although FASAB established the reporting objectives framework in 

developing the PP&E accounting standards, it concluded that capitalization 

thresholds should be established by the federal entities themselves, based 

11In October 1990, the Secretary of the Treasury, the Director of OMB, and the Comptroller 

General established FASAB to develop a set of generally accepted accounting standards for 

the federal government.

12Accounting standards are authoritative statements of how particular types of transactions 

and other events should be reflected in financial statements. Accounting concepts explain 

the objectives and ideas upon which FASAB develops the standards.
Page 8 GAO-03-42 PP&E Policy Survey

on their diversity in size and uses of PP&E. FASAB’s requirements in terms 

of establishing appropriate capitalization thresholds are that they be based 

on consideration of the entities’ financial and operational conditions, 

consistently applied, and disclosed in the financial reports. Before 1991, 

accounting principles, standards, and related requirements for executive 

agencies were published in appendix I of Title 2, “Accounting,” of the GAO

Policy and Procedures Manual for Guidance of Federal Agencies, in 

accordance with 31 U.S.C. 3511. The capitalization threshold for federal 

agencies included in Title 2 was $5,000. In addition, under Federal 

Acquisition Regulations, government contractors are required to capitalize 

all assets costing $5,000 or more. Capitalization thresholds are tied to 

materiality as well, in that they generally are established at a level that 

would not omit a significant amount of assets from the balance sheet, 

which could materially misstate the financial statements of an entity or its 

components. 

There is not an authoritative standard issued in the private sector 

specifically addressing capitalization threshold levels. However, the 

underlying GAAP state that all normal expenditures of purchasing or 

constructing an asset and readying it for use are capitalized, thereby 

achieving the matching principle by distributing the costs of such assets to 

the periods benefited through depreciation. Capitalization thresholds are 

set at levels that would not approach materiality in any foreseeable 

circumstances. 

SFFAS No. 6 requires that depreciation expense be recognized on all 

general PP&E, except land and land rights of unlimited duration. 

Depreciation is the systematic and rational allocation of the costs of 

general PP&E to the operating periods benefiting from the asset, also 

referred to as the estimated useful life. FASAB again did not prescribe 

specific classifications of estimated useful lives. Instead, it requires that 

the useful life consider economic, environmental, and technological factors 

such as physical wear and tear and obsolescence. 

In the private sector, GAAP state that depreciation method and rate depend 

upon such factors as time, usage, maintenance policies, and asset 

obsolescence, and recognize certain prescribed methods for allocating the 

cost to the periods benefited. 
Page 9 GAO-03-42 PP&E Policy Survey

Federal PP&E PP&E consists of tangible assets, including land, that have estimated useful 

lives of 2 years or more, are not intended for sale in the ordinary course of 

operation, and have been acquired or constructed with the intention of 

being used or being available for use by the entity. SFFAS No. 6, 

Accounting for Property, Plant, and Equipment, identifies four categories 

of PP&E: (1) general PP&E, (2) national defense PP&E,13 (3) heritage 

assets, and (4) stewardship land. General PP&E is used to provide general 

government services or goods and is reported on the balance sheet for 

federal financial reporting. National defense PP&E, heritage assets, and 

stewardship land are collectively referred to as stewardship PP&E and are 

reported in Supplementary Stewardship Information for federal financial 

reporting and are not included on the balance sheet or any other principal 

statement. FASAB has approved issuing a standard14 that would eliminate 

the category of national defense PP&E, and all items previously considered 

national defense PP&E would be classified as general PP&E. The focus of 

this report is on general PP&E, reported on the balance sheet of the U.S. 

government, which under current federal accounting standards does not 

include national defense PP&E.

General PP&E consists of items that (1) could be used for alternative 

purposes but are used by the federal entity to produce goods or services or 

to support the mission of the entity, (2) are used in business-type activities, 

or (3) are used by entities in activities whose costs can be compared to 

other entities. SFFAS No. 6 requires that all general PP&E be recorded at 

cost, which shall include all costs incurred to bring the PP&E to a form and 

location suitable for its intended use. General PP&E includes land 

acquired for or in connection with other general PP&E and heritage 

assets,15 whose predominant use is general government operations. 

13National defense PP&E is a term established by SFFAS No. 11 to replace the term federal 

mission PP&E used in SFFAS No. 6 and SFFAS No. 8. National defense PP&E consists of

(1) PP&E weapons systems and support PP&E owned by the Department of Defense or its 

component entities for use in the performance of military missions and (2) the vessels held 

in a preservation status by the Maritime Administration’s National Defense Reserve Fleet.

14In June of 2002, FASAB approved issuing SFFAS No. 23, Eliminating the Category 

National Defense Property, Plant, and Equipment. The standard was submitted to the 

Congress and the three sponsors of the FASAB. If no member of the Congress and none of 

the sponsors object, FASAB will publish the standard. 

15SFFAS No. 16 describes reporting standards for heritage assets that serve dual purposes, in 

that they have heritage characteristics and are used in general government operations. 

These assets were referred to as multi-use heritage assets in SFFAS No. 6 and SFFAS No. 8.
Page 10 GAO-03-42 PP&E Policy Survey

General PP&E is often classified into two main categories, personal and 

real property. Personal property includes vehicles, machinery, furniture, 

equipment, and software. Real property is land, buildings, and generally 

anything built or constructed on land, growing on land, or attached to the 

land. 

Federal Agency 

Capitalization 

Thresholds Have Risen 

Significantly and Are 

Substantially Higher 

than Private Sector 

Capitalization 

Thresholds

Capitalization threshold levels at federal agencies have risen significantly 

over the past 5 years. Over 60 percent of the agencies surveyed have at 

least doubled their capitalization thresholds in the past 5 years. Further, 

federal capitalization threshold levels are significantly higher than those 

reported by the 12 private sector entities we surveyed. The maximum 

federal capitalization threshold levels reported for personal and real 

property were much higher than those reported by the private sector 

companies. Inappropriate or excessive capitalization thresholds have a 

significant impact on financial reporting and related oversight issues and 

may not comply with SFFAS No. 6 requirements.

Federal Capitalization 

Thresholds Have Risen 

Significantly in the Past 5 

Years

Nine out of the 14 agencies surveyed reported that they had increased their 

capitalization thresholds in the past 5 years by 100 percent or more, for at 

least one category of property (excluding software). Figure 1 displays the 

increases by agency. Six agencies increased the capitalization threshold by 

400 percent or more, 2 raising the threshold from $5,000 to $25,000, 2 

raising the threshold from $5,000 to $100,000, 1 raising the threshold from 

$25,000 to $200,000, and 1 raising the threshold from $5,000 to $250,000. 

Appendix III provides detailed lists of the current capitalization level for 

both personal and real property by federal agency. 
Page 11 GAO-03-42 PP&E Policy Survey

Figure 1: Increase in Capitalization Threshold Levels at Federal Agencies

Note: Unless noted below, these are maximum reported capitalization threshold levels for real and 

personal property (excluding software) at 14 surveyed federal agencies. 

a

The numbers represent maximum reported capitalization threshold levels for personal property.

b

The numbers represent maximum reported capitalization threshold levels for real property. 

c

Education did not have a consistent capitalization threshold policy prior to October 1997.

d

GSA established a capitalization threshold of $5,000 in August 1998. Information prior to August 1998 

was unavailable. The numbers represent maximum reported capitalization threshold levels for 

personal property.

e

SSA increased its capitalization threshold to $100,000 in April 1996. Prior to April 1996, its threshold 

was $5,000. The numbers represent maximum reported capitalization threshold levels for personal 

property.

Source: GAO analysis of survey data.

Reasons given by the surveyed federal agencies for changing the 

capitalization thresholds included materiality, implementation of federal 

accounting standards, management decision, or external auditor 

recommendation. 

0

50

100

150

200

250 Capitalization threshold levels (dollars in thousands)

Prior to October 1997

Current thresholds

Federal government agencies

25 25

5 2 3 5

25

5 10

100

5

100

5

250

5 5 N/A

50

5

25

100

50

5

15

25 25

200

25

DOCNOAADOI- DOE

Reca

DOJBOPbDOTFAAEducationc GSAd NASA SSAe Stateb TVAb USDA VA USPSa
Page 12 GAO-03-42 PP&E Policy Survey

Twelve out of 14 federal agencies surveyed responded that they had 

performed some type of formal analyses or studies to develop or validate 

the capitalization threshold level. In some instances, the studies concluded 

that the threshold level was too low, prompting agency management to 

increase the capitalization threshold. Many agencies’ approaches to the 

capitalization threshold analyses involved applying varying threshold levels 

to PP&E balances to identify a capitalization level that resulted in a certain 

desired percentage of PP&E being captured on the balance sheet in relation 

to total PP&E. Although our survey asked for a brief description of the 

methodology used in the analyses, we did not request copies of the 

analyses from the federal agencies or assess the methodology or 

conclusions reached. We did note, however, that 5 of the 12 agencies 

solicited outside assistance in performing the analyses, and of those 5, 2 

involved their respective offices of the inspector general. 

Although DOD was not included in this review, the department holds a 

significant portion of federal PP&E. DOD’s reported general PP&E 

holdings for fiscal year 2001 were $113.8 billion, net of accumulated 

depreciation, representing approximately 37 percent of the federal 

government’s PP&E reported on the U.S. government’s consolidated 

balance sheet. DOD’s capitalization threshold has risen from $5,000 in 1994, 

to $50,000 in 1995, and to $100,000 in 1996, which remains the current level. 

DOD had contractors perform a study to validate its capitalization 

thresholds and useful life policies for personal and real property. We 

reviewed the contractors’ work and agreed that certain limitations they 

cited in their reports—such as that the databases they analyzed may not 

have been appropriate, complete, and accurate—could directly affect the 

assessment of the adequacy of the capitalization threshold and useful life 

policies. The contractor recommended that DOD undertake similar 

periodic analyses in future years.

Further, federal agency capitalization thresholds varied widely. They 

ranged from $0 to $250,000, excluding computer software, where the 

capitalization threshold ranged from $5,000 to $5 million. The lack of 

consistency in capitalization threshold levels among federal agencies could 

potentially lead to reporting problems in the U.S. government’s 

consolidated financial statements and performance measurement 

comparisons. For example, at some agencies major assets such as motor 

vehicles may be capitalized and at others they may not due to the varying 

capitalization threshold levels. As a result, the costs of vehicles used by 

certain agencies could be expensed in 1 fiscal year and not allocated to all 

the years benefiting from their use. Further, GAAP require that the 
Page 13 GAO-03-42 PP&E Policy Survey

capitalization threshold, including any changes in the threshold during the 

reporting period, be disclosed on the financial statements. Treasury has 

not disclosed the capitalization threshold used in the consolidated financial 

statements, or the fact that many reporting agencies have different 

capitalization thresholds. 

Despite the sharp increase in the capitalization threshold, almost all of the 

surveyed agencies responded that they maintained property records for 

PP&E not capitalized on the balance sheet, for purposes of safeguarding 

PP&E, supporting agency operations, or fulfilling external reporting 

requirements. For example, all surveyed agencies indicated that they have 

policies and procedures in place, such as bar coding and periodic 

inventories, for safeguarding and maintaining accountability over pilferable 

and sensitive items. We did not evaluate the adequacy of the design of the 

agency policies and procedures or the effectiveness of the controls or their 

implementation. Even though 13 of the 14 federal agencies in our survey 

reported that they maintain property records for PP&E not capitalized on 

the balance sheet, most were unable to provide the cumulative value of 

PP&E recorded in property records but not capitalized on the balance 

sheet as of the end of fiscal year 2000. Only the National Aeronautics and 

Space Administration (NASA) and the Federal Aviation Administration 

(FAA) responded with the cumulative value of PP&E not reported on their 

balance sheets as of September 30, 2000—approximately $4.9 billion and 

$1.6 billion, respectively. However, we noted that NASA’s auditors for fiscal 

year 2001 reported a material weakness related to PP&E, so the amount 

NASA reported as being expensed may not be reliable.

Federal Capitalization 

Thresholds Differ 

Significantly from the 

Private Sector

Federal capitalization thresholds are significantly higher than those 

reported by the 12 private sector entities we surveyed. We found that the 

agency capitalization thresholds for personal property ranged from $3,000 

to $200,000, and in some cases were 40 times higher than the maximum 

levels reported by the private sector participants. Table 1 compares the 

ranges of capitalization thresholds noted at the federal agencies surveyed 

to those of the private sector participants. Appendix IV provides the 

specific personal property responses for all survey participants by 

category.
Page 14 GAO-03-42 PP&E Policy Survey

Table 1: Capitalization Threshold Ranges for Personal Property

Source: GAO analysis of survey data.

As shown in table 1, private sector respondents’ threshold levels for 

personal property ranged from as low as $250 up to $5,000. Under these 

threshold levels, office equipment costing $20,000 with an estimated useful 

life of 5 to 7 years, would not be capitalized at more than half (9 out of 14) 

of the federal agencies surveyed, but would be capitalized at all of the 

private sector company participants.

Five of the surveyed federal agencies responded as having a separate 

capitalization threshold level for bulk purchases. A bulk purchase policy 

generally refers to capitalization guidelines when acquiring significant 

asset quantities in bulk at one time, where the individual unit price falls 

below the original threshold. For example, the National Oceanic and 

Atmospheric Administration’s (NOAA) policy is to capitalize a bulk 

procurement of $1 million or more for personal property with a unit price 

from $25,000 to its individual capitalization threshold of $200,000, if the 

items are identical. The Department of Education has a $500,000 bulk 

purchase policy, and the Social Security Administration (SSA) has a 

$10 million bulk purchase policy for computer hardware and software. 

Personal computers acquired individually would not be capitalized at many 

surveyed federal agencies under the current capitalization threshold levels, 

and bulk purchases of personal computers would have to rise to the 

capitalization threshold level, or higher at some agencies, as noted above, 

to be capitalized on the balance sheet. The remaining nine federal agencies 

responded that the capitalization threshold levels apply to both single item 

and bulk purchases of PP&E, as did the majority of the private sector 

companies surveyed. However, the few private sector respondents with 

bulk purchase policies indicate an emphasis on capitalizing assets and 

minimizing the impact on net income. For example, Pfizer responded that 

acquisitions of multiple like items would be capitalized if they exceed 

$10,000 in the aggregate, even though each item is under its $1,000 

threshold level.

Range of threshold

Personal property category

Levels at federal

agencies

Levels at private sector

companies

Equipment $3,000 - $200,000 $250 - $5,000

Furniture and fixtures 3,000 - 100,000 250 - 5,000

Motor vehicles 0 - 200,000 250 - 5,000
Page 15 GAO-03-42 PP&E Policy Survey

Certain federal agencies in our survey, as well as some private sector 

companies, reported capitalization thresholds specifically for software, 

classified as personal property on the balance sheet. The agencies’

capitalization thresholds for software ranged from $5,000 to $5 million, or 

20 times higher than the maximum level reported by the private sector 

participants. The private sector respondents that reported specific 

capitalization threshold levels for software indicated ranges from $1,000 to 

$250,000. Figure 2 displays the percentages of surveyed federal agencies 

and private sector companies at each capitalization threshold level for 

software. As shown in figure 2, 92 percent of the federal agencies surveyed 

have threshold levels greater than $10,000 for software, compared to the 

private sector, with 25 percent of respondents in that category. The 

majority of the private sector software capitalization threshold levels were 

$10,000 and below.

Figure 2: Percentage of Federal Agencies and Private Sector Companies at Various Software Capitalization Threshold Levels

Source: GAO analysis of survey data.

$10,000 and below

$10,001-100,000

$100,001-500,000

$500,001-5,000,000

Surveyed federal agencies Surveyed private sector entities

 23%

23%

8%

46%

Software capitalization threshold levels

8%

75%

17%
Page 16 GAO-03-42 PP&E Policy Survey

SFFAS No. 10, Accounting for Internal Use Software, effective for 

reporting periods after September 30, 2000, was cited by several federal 

agencies as the basis for establishing a separate threshold just for software 

or increasing their capitalization threshold levels for software. SFFAS No. 

10 requires the capitalization of the full cost (direct and indirect) of internal 

use software whether it is commercial-off-the-shelf, contractor developed, 

or internally developed. A specific capitalization threshold for software, 

separate from the threshold for all other personal property, may be 

warranted at many agencies due to the varying and incremental nature of 

the costs that go into software development, such as salaries. However, the 

threshold level for software also varies quite significantly among the 

federal agencies surveyed, which could result in the consolidation and 

comparison problems discussed previously. Appendix V provides the 

specific software responses for all survey participants. 

Capitalization thresholds for real property ranged from zero, or no 

threshold, indicating that all such assets are capitalized on the balance 

sheet, to $250,000, which is 50 times the highest level reported by the 

private sector participants. Table 2 displays the capitalization threshold 

ranges for real property at the federal agencies surveyed compared to those 

in the private sector. Appendix VI provides the specific real property 

responses for all survey participants by category.

Table 2: Capitalization Threshold Ranges for Real Property

Source: GAO analysis of survey data.

Private sector respondents’ threshold levels for real property ranged from 

$0 to $5,000. Under these threshold levels, a building costing $95,000 with 

an estimated useful life of 30 years would not be capitalized at some federal 

agencies surveyed, but would be capitalized at all of the private sector 

company participants. For example, Gillette, a large corporation with over 

Range of threshold

Real property category

Levels at federal

agencies

Levels at private sector

companies

Buildings $0 - $200,000 $0 - $5,000

Building improvements 0 - 250,000 500 - 5,000

Other structures and facilities 0 - 200,000 0 - 5,000

Leasehold improvements 0 - 250,000 500 - 5,000
Page 17 GAO-03-42 PP&E Policy Survey

$10 billion in assets, has a uniform threshold level of $2,500 for both real 

and personal property, with the exception of software.

As shown in tables 1 and 2, the threshold levels in the private sector for 

most personal property and real property are relatively low, and more 

consistent with the $5,000 capitalization threshold level previously 

established for federal agencies in Title 2 of the GAO Policy and 

Procedures Manual for Guidance of Federal Agencies, in accordance with 

31 U.S.C. 3511. In addition, under Federal Acquisition Regulations,16

government contractors are required to capitalize all assets costing $5,000 

or more.

Potential Impact of High 

Capitalization Thresholds 

on Financial Reporting

Our survey work was not designed to conclude on the reasonableness of 

the capitalization threshold levels being applied at the federal agencies or 

the private sector companies. However, the widely varying threshold levels 

among the federal agencies, the sharp increases in recent years, and the 

differences from private sector companies of considerable size in terms of 

reported PP&E and total assets raise some concerns. Inappropriate or 

excessive capitalization thresholds have a significant impact on financial 

reporting and related oversight issues and may not comply with SFFAS No. 

6 requirements to capitalize all items that meet certain characteristics, such 

as a useful life of 2 years or more. FASAB believed that not specifying a 

threshold level, and allowing agencies broad latitude in establishing 

capitalization thresholds suited to their respective financial and 

operational conditions, would lead to a more cost-effective application of 

the accounting standard.17 However, objectives outlined by FASAB in the 

SFFAC No. 1, such as (1) stewardship responsibility, (2) capturing the full 

cost of operations, and (3) reliable financial reporting, may not be met as a 

result of the wide range and significant increase in threshold levels that we 

identified in our survey.

Excessively high capitalization thresholds reduce the amount of federal 

assets that are reported on the balance sheet, distorting financial reporting 

by potentially jeopardizing the matching of costs to the appropriate period 

of asset utilization. For example, in February 2000, we reported that an 

16Title 48, U.S. Code of Federal Regulations, Section 9904.404-40.

17SFFAS No. 6, Accounting for Property, Plant, and Equipment, Appendix A, Basis for 

Conclusions.
Page 18 GAO-03-42 PP&E Policy Survey

inappropriate capitalization threshold contributed to a material 

understatement in PP&E of approximately $1 billion, representing about 77 

percent of the IRS’s total PP&E balances as of September 30, 1999. IRS 

had been following the Department of the Treasury’s standard $50,000 

capitalization criterion, and now capitalizes most property and equipment 

regardless of the dollar amount, based upon the capitalization issues raised 

as a result of our financial audit of IRS.

Further, six of the agencies surveyed reported that they expensed a total of 

almost $2 billion in PP&E for the fiscal year ended September 30, 2000, and 

therefore did not report this amount on the U.S. government’s consolidated 

balance sheet as assets. While the $2 billion is a relatively small amount 

compared to the total PP&E or total assets reported on the consolidated 

financial statements of the U.S. government, this amount is incomplete, as 

the remaining eight agencies surveyed could not readily provide the 

amount expensed for the same period as a result of the PP&E acquisition 

costs not meeting the capitalization threshold. An assessment of whether 

the capitalization threshold has a material effect on financial reporting is 

difficult to make if agencies cannot provide the amount of assets that does 

not meet the capitalization threshold and is therefore expensed in a given 

year.

Interestingly, one of our surveyed federal entities, USPS, which sets its 

rates and fees to recover its costs, reported a $3,000 personal property 

capitalization threshold and $5,000 real property threshold, which is more 

in line with the surveyed private sector companies’ capitalization threshold 

levels. For example, Exxon Mobil Corporation, a global company with net 

PP&E of $90 billion as of December 31, 2000, also has a capitalization 

threshold of $3,000, excluding software. In fact, in looking at capitalization 

threshold levels for personal property in the private sector excluding 

software, all but 2 of the 12 participants had a threshold of $3,000 or less, 

and the remaining 2 had a $5,000 threshold.
Page 19 GAO-03-42 PP&E Policy Survey

As reported in our High-Risk Series,

18 some federal entities do not yet have 

reliable financial and operational information to measure performance 

based on the costs of providing goods and services and therefore appear to 

have little incentive to maintain assets on the balance sheet through lower 

capitalization thresholds. For example, we reported19 in January 2001 that 

the Department of Agriculture (USDA) lacked financial accountability over 

billions of dollars of assets. FAA’s financial management was also 

designated as high risk because of serious and long-standing accounting 

and financial management weaknesses, including property system issues. 

Reliable information on the costs of federal programs and activities, of 

which PP&E is a major factor, is crucial for effective management of 

government operations.

Federal Agencies’

Estimated Useful Lives 

for Like Assets Are 

Similar

Useful lives for personal property ranged from 2 to 40 years among the 

surveyed federal agencies, but include a wide array of assets. Upon 

comparing the recovery periods for like assets, the range narrows. For 

example, the useful lives for motor vehicles ranged from 3 to 12 years in the 

federal agencies surveyed. Useful lives for real property at the surveyed 

federal agencies ranged from 5 to 100 years, which is a wide range that 

encompasses numerous and varying types of real property. The federal 

government’s real property is quite diverse, and includes items such as 

office buildings, dams, laboratories, courthouses, postal facilities, and 

embassies. However, when comparing the useful lives for similar buildings 

or structures across the federal government, the recovery periods are 

similar. For example, 12 out of the 14 surveyed federal agencies indicated 

useful life classifications for buildings of 30 to 40 years.

The useful life policies within the federal government were generally 

similar to those found in the private sector. No significant differences were 

noted between the federal government and the private sector survey 

respondents in the useful life policies for certain personal property 

categories such as equipment, furniture and fixtures, motor vehicles, and 

software. The ranges of useful life classifications for both federal and 

private sector company participants are shown in table 3 for personal 

property and in table 4 for real property. Appendixes VII and VIII detail the 

18GAO-01-263 and GAO-01-241 through GAO-01-262.

19U.S. General Accounting Office, Major Management Challenges and Program Risks: 

Department of Agriculture, GAO-01-242 (Washington, D.C.: January 2001).
Page 20 GAO-03-42 PP&E Policy Survey

useful life ranges for personal and real property for each survey 

participant.

Table 3: Useful Life Ranges for Personal Property

Source: GAO analysis of survey data.

As noted above, the useful life ranges by category at the surveyed federal 

agencies are similar to those at the surveyed private sector companies. The 

high useful life of 40 years for equipment pertains to certain items at the 

Department of Energy (DOE), such as compressors and metal tanks. If 

such equipment were excluded, the maximum useful life classification for 

equipment at the surveyed federal agencies would be 25 years—identical to 

that in the private sector.

Table 4: Useful Life Ranges for Real Property

Source: GAO analysis of survey data.

The few differences that we identified between federal agency and private 

sector useful lives are due to the different types of assets owned by the 

survey participants rather than any systemic differences in the useful life 

policies. For example, the maximum useful life classification for buildings 

was reported as 75 years by two surveyed agencies, the Department of the 

Interior’s Bureau of Reclamation and USPS. At the Bureau of Reclamation, 

the building useful life range of 30 to 75 years was reported for service 

Useful life ranges (in years)

Personal property 

category Federal agencies Private sector companies

Equipment 2 - 40 2 - 25

Furniture and fixtures 4 - 20 3 - 20

Motor vehicles 3 - 12 2 - 10

Software 2 - 10 3 - 10

Useful life ranges (in years)

Real property category Federal agencies Private sector companies

Buildings 5 - 75 10 - 50

Other structures and facilities 5 - 100 10 - 40

Other 5 - 75 5 - 50
Page 21 GAO-03-42 PP&E Policy Survey

facilities, which consist of houses, buildings, garages, and shops owned by 

the bureau and used in electric, irrigation, municipal and industrial, or 

multipurpose operations and are not included in the plant accounts of a 

specific project. At USPS, the 75-year building useful life was reported only 

for pre-July 1970 monumental (indicating stone or stone ornamentation) 

buildings. Other than these two specific classifications within the buildings 

category, the maximum useful life classification for buildings at the 

surveyed federal agencies would be 50 years, and identical to that in the 

private sector. Similarly, the 100-year useful life for other structures and 

facilities at the surveyed federal agencies was for dams and related 

property at the Bureau of Reclamation. The longest useful life reported by 

the private sector respondents is 40 years for other structures and facilities, 

but none of the private sector respondents reported an asset similar to a 

dam. We did not receive survey results from any private sector utility 

companies for comparison purposes because we were limited to the 

Private Sector Council (PSC) members that voluntarily participated in our 

survey. 

Adequate useful life classifications also serve as a mechanism to achieve 

fair presentation of an entity’s financial position and results of operations 

in accordance with GAAP. New additions to PP&E that replace old or 

obsolete assets generally occur as the useful lives of the older assets are 

reaching completion, and the typical financial statement impact of the 

removal of an almost fully depreciated asset or a fully depreciated asset is 

minimal to none. However, if the useful life assigned to an asset or a class 

of assets does not reflect its actual service life, then the financial statement 

impact could be greater. For example, if an asset is assigned a useful life 

that exceeds its actual service life, the preliminary result would be an 

overstatement on the agency’s balance sheet and an understatement on its 

statement of net cost for a period.20 Conversely, if an asset’s designated 

useful life were lower than its actual service life, the preliminary result 

would be an understatement on the agency’s balance sheet and an 

overstatement on its statement of net cost for a period.21 

20The period would be equivalent to the difference between the assigned useful life and the 

actual service life.

21See footnote 19.
Page 22 GAO-03-42 PP&E Policy Survey

Observations Our survey results identified widely varying capitalization threshold levels, 

sharp increases in recent years, and significant differences from private 

sector companies of comparable size. Because capitalization thresholds 

may have a significant effect on the consolidated financial statements of 

the U.S. government, this survey was designed as the first step in providing 

baseline information to analyze these significant PP&E policies and assess 

their impact on the financial reports of the U.S. government. In addition, 

agency management and auditors also have continuing responsibilities to 

ensure that established capitalization threshold levels are appropriate. 

These issues are especially critical for agencies that establish user fees 

based on actual costs and will become even more important as the 

government moves toward matching revenues and costs for performance 

measurement purposes. The information obtained as a result of our survey 

can be used as a tool for further analysis and assessment of these issues. 

Comments and Our 

Evaluation

We provided a draft of this report to 14 federal agencies and 12 private 

sector companies that participated in our survey, as well as to the 

Department of the Treasury and OMB. We received comments from 

Treasury, OMB, and 4 of the 14 federal agencies surveyed, including USDA, 

the Department of the Interior (Bureau of Reclamation), NASA, and the 

Department of State (see appendixes XI through XV). Seven federal 

agencies, including the departments of Education, Energy, Justice (Bureau 

of Prisons (BOP)), Transportation (FAA), and Veterans Affairs (VA), as well 

as the Tennessee Valley Authority (TVA) and USPS, provided primarily 

editorial comments, which we have incorporated into the report as 

appropriate. The remaining 3 agencies, which include the Department of 

Commerce (NOAA), the General Services Administration (GSA), and SSA, 

reviewed a draft of this report and told us they had no comments. Three 

PSC members that participated in the survey, Allstate, McGraw-Hill, and 

PPG Industries, also provided primarily editorial comments, which we have 

incorporated into the report as appropriate.

The substantive comments we received from the Treasury, OMB, and 

federal entities had a common theme, in that they all generally took issue 

with comparing the capitalization threshold levels in the federal 

government to those in the private sector. For example, the Department of 

the Treasury stated that the private sector has income tax considerations 

that affect capitalization thresholds, but these are not an issue at federal 

agencies. In this regard, our private sector survey instrument (see appendix 

X) recognized this consideration by specifically asking for information 
Page 23 GAO-03-42 PP&E Policy Survey

regarding practices for financial reporting, or book purposes, and not for 

income tax reporting. USDA referred to inherent differences between the 

government and the private sector in reporting cost and income. NASA and 

the State Department commented that the report did not acknowledge the 

private sector’s profit objective, which they viewed as the main force 

behind its PP&E policies and practices, as distinctly different from the 

financial reporting objectives of the U.S. government. 

Our views on asset capitalization are based upon two fundamental 

accounting concepts: the matching principle and materiality. The matching 

principle aims to assign costs to the proper period. In the case of capital 

assets, this is done through depreciation to recognize the use of the asset 

and can only occur if the asset is capitalized and not totally expensed when 

placed in service. The concept of materiality overlays the matching 

principle to provide relief from capitalizing and tracking assets that are 

immaterial to an entity’s financial statements. The establishment of a 

capitalization threshold policy must be supported by a detailed analysis, 

anchored by these two fundamental principles of matching and materiality. 

Furthermore, capitalization thresholds should be periodically reevaluated 

to help ensure their continuing relevance. Our report provides baseline 

data that we believe could be useful to federal agencies in analyzing 

capitalization thresholds. For example, NASA’s reported total assets as of 

September 30, 2000, were $34.5 billion, similar to Pfizer’s reported

$33.5 billion at its fiscal year-end of December 31, 2000. NASA’s 

capitalization threshold for both real and personal property is $100,000 

compared to Pfizer’s $1,000 threshold. Further, NOAA’s reported total 

assets at September 30, 2000, were $5.5 billion, similar to McGraw-Hill’s 

reported $4.9 billion at its fiscal year-end of December 31, 2000. NOAA’s 

capitalization threshold for both real and personal property is $200,000 

compared to McGraw-Hill’s $2,000 threshold. 

Our survey work was not designed to conclude on the reasonableness of 

the capitalization threshold levels being applied at the federal agencies or 

the private sector companies nor do we draw any conclusions. However, 

the widely varying threshold levels among the federal agencies, the sharp 

increases in recent years, and the large differences from private sector 

companies of considerable size in terms of reported PP&E and total assets 

are issues that we plan to review further. Inappropriate or excessive 

capitalization thresholds can have a significant impact on financial 

reporting by reducing the amount of federal assets that are reported on the 

balance sheet and by jeopardizing the matching of costs to the appropriate 

period of asset utilization.
Page 24 GAO-03-42 PP&E Policy Survey

While certainly differences exist between federal financial reporting 

objectives and those in the private sector, there are similarities as well. 

Both federal financial statements and those of private sector companies 

seek to provide reliable, useful, and timely information to their users. 

Similar to private sector companies’ responsibility to fairly state profits or 

net income, federal entities have a responsibility to fairly state the net cost 

of operations. This is also important in determining fees to be charged, in 

other efforts to recoup costs through any reimbursement arrangement, and 

in the ability to match costs with performance.

OMB’s comments also included similar concerns related to comparing 

federal capitalization threshold levels to those in the private sector. In 

addition, OMB noted that a comparison to the capitalization threshold 

levels of state and local governments would be informative, and referred to 

a recent survey of state comptrollers, done by the National Association of 

State Comptrollers (NASC). The results of the survey were reported in the 

July 2002 newsletter of the National Association of State Auditors, 

Comptrollers and Treasurers. While the NASC survey and its reported 

results appeared after we had completed our fieldwork, OMB felt strongly 

that the survey and its results should be mentioned in our report. Although 

a review of the NASC survey was not within the scope of our work, we 

noted that a significant22 portion of the states participating in the survey 

reported a $5,000 threshold, which is also the threshold required by the 

federal government for grant recipients’ recovery of costs under OMB 

Circular A-87.23 These thresholds, particularly those for personal property, 

are in line with those used by most of the private sector survey 

participants. Federal Acquisition Regulations24 also require federal 

government contractors to apply a capitalization threshold not to exceed 

$5,000.

OMB, Treasury, and the Bureau of Reclamation took issue with our 

statement that the lack of consistency in capitalization threshold levels 

22Of the 34 states that participated in NASC’s survey, 70 percent use a $5,000 capitalization 

threshold level for personal property, and 30 percent use a $5,000 capitalization threshold 

level for real property. 

23OMB Circular A-87 establishes principles and standards for determining costs for federal 

awards carried out through grants, cost reimbursement contracts, and other agreements 

with state and local governments and federally recognized Indian tribal governments 

(governmental units).

24Title 48, U.S. Code of Federal Regulations, Section 9904.404-40.
Page 25 GAO-03-42 PP&E Policy Survey

among federal agencies could potentially lead to reporting problems in the 

U.S. government’s consolidated financial statements and performance 

measurement comparisons. As stated in our report, individual 

capitalization threshold levels are permissible under federal accounting 

standards, and because each federal agency was established with a specific 

mission, they may possess unique assets to achieve their respective goals. 

At the same time, consistent treatment of like assets is critical to accurate 

performance measurement and reliable, relevant consolidated financial 

reporting. Management has a responsibility to ensure that the financial 

statements are fairly stated, in all material respects, and the auditor’s role is 

to provide an opinion on that basic assertion, based on its work. As the 

auditor of the U.S. government’s financial statements, we must ensure that 

the varying capitalization thresholds do not result in or contribute to a 

material misstatement at the consolidated level. The results of our survey 

can provide useful baseline data to OMB and Treasury in their respective 

roles, and to agencies and their auditors as they continue to periodically 

assess the adequacy of the capitalization threshold in terms of material 

impact on financial reporting.

We are sending copies of this report to the Chairman and Ranking Minority 

Member, Senate Committee on Governmental Affairs; the Chairman and 

Ranking Minority Member, House Committee on Government Reform; the 

Chairman and Ranking Minority Member, Subcommittee on Government 

Efficiency, Financial Management and Intergovernmental Relations, House 

Committee on Government Reform; and other interested congressional 

committees. We are also sending copies to the Chief Financial Officers, the 

Inspectors General and other interested parties, including the survey 

participants, the Private Sector Council, and the Chairman of the Federal 

Accounting Standards Advisory Board. In addition, the report will be 

available at no charge on the GAO Web site at http://www.gao.gov. If you 
Page 26 GAO-03-42 PP&E Policy Survey

have any questions on this report, please contact me at (202) 512-9505 or 

Mary Arnold Mohiyuddin at (202) 512-3087.

Gregory D. Kutz

Director

Financial Management and Assurance 

 
Page 27 GAO-03-42 PP&E Policy Survey

Appendix I

Objectives, Scope, and Methodology ApApenednxidexiIs

The objectives of this report were to determine (1) what are the federal 

government’s current capitalization threshold practices for PP&E and how 

such federal government policies compare to those practices being applied 

to PP&E in the private sector and (2) what are the useful life policies within 

the federal government and how they compare to those used in the private 

sector.

To fulfill these objectives, we developed two surveys, one for federal 

agencies and one for private sector companies. The surveys were used to 

collect information on capitalization thresholds and useful life policies, 

studies or analyses supporting those policies, and other related data that 

would assist us in determining the rationale for these PP&E policies as well 

as give us an indication of any differences or similarities between federal 

practices and private sector practices in the PP&E policy area.

For the federal government, we considered the 24 federal agencies 

responsible for annual audited financial statements as required under the 

CFO Act as expanded by the Government Management and Reform Act of 

1994. We sent the survey to federal agencies with a reported $4 billion or 

more of net PP&E at September 30, 2000, except for DOD. For four 

agencies (Commerce, Interior, Justice, and Transportation), we surveyed a 

single component of the entire department due to the significant number of 

reporting components or because of the possibility of differing PP&E 

accounting policies for the various components. For each of those four 

agencies, we selected the component with the largest percentage of the 

total reported PP&E for that department. In addition, we randomly 

selected two federal agencies with net PP&E as of September 30, 2000, well 

below $4 billion to participate in the survey. We received completed 

surveys from all 14 federal agencies we contacted.

Although DOD is the largest holder of PP&E in the federal government, we 

chose not to include it in this survey. DOD had a study performed by 

contractors to validate its capitalization thresholds and useful life policies 

for personal and real property. We reviewed the contractors’ work and 

agreed that certain limitations they cited in their reports pertaining to the 

reliability and completeness of the data could directly affect the 

assessment of the adequacy of the capitalization threshold and useful life 

policies. Nonetheless, the reported value of net PP&E for federal survey 

participants represents over half of the federal government’s reported net 

PP&E as of September 30, 2000. Appendix II lists all agency survey 

participants.
Appendix I

Objectives, Scope, and Methodology

Page 28 GAO-03-42 PP&E Policy Survey

We also surveyed member companies of the PSC, a nonprofit, nonpartisan 

public service organization committed to helping the federal government 

improve its efficiency, management, and productivity through cooperative 

sharing of knowledge. We sent our survey to all member companies, 

approximately 40, and received completed surveys from 12 PSC members. 

Appendix II contains the complete list of PSC survey participants. 

We did not audit or verify the information provided by the federal agency or 

private sector survey participants in any way. We summarized the data 

collected from both survey groups, as reported to us by the respondents. 

We conducted telephone interviews with personnel at certain agencies and 

PSC members for follow-up questions or clarification purposes as needed. 

The practical difficulties of conducting any survey may introduce errors, 

commonly referred to as nonsampling errors. For example, difficulties in 

how a particular question is interpreted, in the sources of information that 

are available to respondents, or in how the data are entered into a database 

can introduce unwanted variability into the survey results. We took steps 

in the development of the questionnaires, the data collection, and the data 

editing and analysis to minimize the nonsampling errors. For example, we 

pretested the questionnaires with a number of respondents to refine the 

survey instruments, we edited the surveys and called respondents to clarify 

answers, and we verified a sample of the survey data that was entered into 

our database for any keypunch errors.

We reviewed GAAP and concepts that related to PP&E accounting, as well 

as federal reporting guidelines issued by Treasury and OMB. In addition, 

we reviewed the financial statements and related notes to the financial 

statements of the federal agencies and private sector companies that 

participated in the survey. 

We performed our work from May 2001 through February 2002 in 

accordance with generally accepted government auditing standards. We 

provided a draft of this report to 14 federal agencies and 12 private sector 

companies that participated in our survey, as well as to the Department of 

the Treasury and OMB. We received comments from Treasury, OMB, and 4 

of the 14 federal agencies surveyed, including USDA, the Department of the 

Interior (Bureau of Reclamation), NASA, and the Department of State. 

Seven federal agencies, including the departments of Education, Energy, 

Justice (BOP), Transportation (FAA), and Veterans Affairs, as well as TVA 

and USPS, provided primarily editorial comments, which we have 

incorporated into the report as appropriate. The remaining 3, which 
Appendix I

Objectives, Scope, and Methodology

Page 29 GAO-03-42 PP&E Policy Survey

include the Department of Commerce (NOAA), GSA, and SSA reviewed a 

draft of this report and told us they had no comments. Three PSC members 

that participated in the survey, Allstate, McGraw-Hill, and PPG Industries, 

also provided primarily editorial comments, which we have incorporated 

into the report as appropriate.
Page 30 GAO-03-42 PP&E Policy Survey

Appendix II

Survey Participants ApendxiI

Note: All figures in billions, except where otherwise noted.

Source: GAO analysis of agency fiscal year 2000 accountability reports.

Federal agencies

 Net PP&E

at 9/30/00

Total assets

at 9/30/00

Net PP&E/total assets

(percentage)

Agriculture $ 5.4 $ 124.4 4.3

Bureau of Prisons (DOJ) 4.6 6.7 68.7

Bureau of Reclamation 

(DOI) 13.2 20.1 65.7

Education 1.3 million 119.0 0.0

Energy (except PMA PP&E) 13.5 81.4 16.6

FAA (DOT) 11.5 27.2 42.3

GSA 15.7 22.2 70.7

NASA 25.5 34.5 73.9

NOAA (Commerce) 3.6 5.5 65.5

SSA 0.3 1,029.2 0.0

State 4.7 23.0 20.4

TVA 29.1 34.0 85.6

USPS 24.1 58.3 41.3

VA 11.6 44.0 26.4

 Total $162.8 $1,629.5 10.0
Appendix II

Survey Participants

Page 31 GAO-03-42 PP&E Policy Survey

Note: All figures in billions, except where otherwise noted.

Source: GAO analysis of financial statements in private sector company annual reports.

Private sector companies

Net PP&E at

fiscal year-end

in 2000

Total assets at

fiscal year-end in

2000

 Net PP&E/total

assets

(percentage)

Allstate $1.0 $104.8 1.0

Boeing 8.8 42.0 21.0

ExxonMobil 89.8 149.0 60.3

Fluor 0.8 3.7 21.6

Gillette 3.6 10.4 34.6

Kaiser Permanente 7.6 14.2 53.5

McGraw-Hill 0.4 4.9 8.2

Meredith Corp. 0.2 1.4 14.3

Pfizer 9.4 33.5 28.1

PPG Industries 2.9 9.1 31.9

SBC Communications 47.2 98.7 47.8

Xerox 2.5 29.5 8.5

 Total $174.2 $501.2 34.8
Page 32 GAO-03-42 PP&E Policy Survey

Appendix III

Capitalization Threshold Increases by Federal 

Agency ApendxiI

a

Capitalization threshold prior to current level not reported by agency, therefore no increase calculated.

Source: GAO analysis of survey data.

Maximum personal property thresholds

Federal agencies Previous Increase Current

Percentage

increase

Agriculture $5,000 $0 $5,000 0

Bureau of Prisons 5,000 0 5,000 0

Bureau of Reclamation 5,000 10,000 15,000 200

Education a a 50,000 --

Energy 25,000 0 25,000 0

FAA 5,000 20,000 25,000 400

GSA 5,000 5,000 10,000 100

NASA 5,000 95,000 100,000 1900

NOAA 25,000 175,000 200,000 700

SSA 5,000 95,000 100,000 1900

State 25,000 0 25,000 0

TVA 25,000 0 25,000 0

USPS 2,000 1,000 3,000 50

VA 5,000 20,000 25,000 400
Appendix III

Capitalization Threshold Increases by 

Federal Agency

Page 33 GAO-03-42 PP&E Policy Survey

a

Capitalization threshold prior to current level not reported by agency, therefore no increase calculated.

Source: GAO analysis of survey data. 

Maximum real property thresholds

Federal agencies Previous Increase Current

Percentage

increase

Agriculture $5,000 $0 $5,000 0

Bureau of Prisons 50,000 50,000 100,000 100

Bureau of Reclamation 0 0 0 0

Education a a 50,000 --

Energy 25,000 0 25,000 0

FAA 5,000 20,000 25,000 400

GSA 10,000 0 10,000 0

NASA 5,000 95,000 100,000 1900

NOAA 25,000 175,000 200,000 700

SSA 25,000 0 25,000 0

State 5,000 245,000 250,000 4900

TVA 25,000 0 25,000 0

USPS 5,000 0 5,000 0

VA 5,000 20,000 25,000 400
Page 34 GAO-03-42 PP&E Policy Survey

Appendix IV

Capitalization Thresholds for Personal 

Property ApendxiIV

a

Federal agency did not report a capitalization threshold for this property category.

b

TVA was not included in the above because it capitalizes entire projects instead of individual assets.

Source: GAO analysis of survey data.

Federal agencies Equipment

Furniture and

fixtures

Motor

vehicles

Agriculture $5,000 $5,000 $5,000

Bureau of Prisons 5,000 a 5,000

Bureau of Reclamation 15,000 a 15,000

Education 50,000 50,000 a

Energy 25,000 25,000 25,000

FAA 25,000 25,000 25,000

GSA 10,000 10,000 10,000

NASA 100,000 100,000 100,000

NOAA 200,000 a 200,000

SSA 100,000 100,000 a

State 25,000 25,000 0

TVA b b b

USPS 3,000 3,000 3,000

VA 25,000 25,000 25,000

Minimum federal 3,000 3,000 0

Maximum federal 200,000 100,000 200,000
Appendix IV

Capitalization Thresholds for Personal 

Property

Page 35 GAO-03-42 PP&E Policy Survey

Source: GAO analysis of survey data.

Private sector companies Equipment

Furniture and

fixtures

Motor

vehicles

Allstate $250 $250 $250

Boeing 5,000 5,000 5,000

ExxonMobil 3,000 3,000 3,000

Fluor 1,500 1,500 1,500

Gillette 2,500 2,500 2,500

Kaiser Permanente 1,000 1,000 1,000

McGraw-Hill 2,000 2,000 2,000

Meredith Corp. 5,000 2,000 5,000

PPG Industries 3,000 3,000 3,000

Pfizer 1,000 1,000 1,000

SBC Communications 2,000 2,000 2,000

Xerox 3,000 3,000 3,000

Minimum private 250 250 250

Maximum private 5,000 5,000 5,000
Page 36 GAO-03-42 PP&E Policy Survey

Appendix V

Capitalization Thresholds for Software ApendxiV

a

TVA was not included in the above because it capitalizes entire projects instead of individual assets. 

Also, it has no specific software threshold.

Source: GAO analysis of survey data.

Federal agencies Maximum

Agriculture $100,000

Bureau of Prisons 5,000

Bureau of Reclamation 100,000

Education 50,000

Energy 750,000

FAA 200,000

GSA 1,000,000

NASA 100,000

NOAA 200,000

SSA 100,000

State 500,000

TVA a

USPS 5,000,000

VA 25,000

Minimum federal 5,000

Maximum federal 5,000,000
Appendix V

Capitalization Thresholds for Software

Page 37 GAO-03-42 PP&E Policy Survey

Source: GAO analysis of survey data.

Private sector companies Maximum

Allstate $250,000

Boeing 5,000

ExxonMobil 5,000

Fluor 10,000

Gillette 5,000

Kaiser Permanente 100,000

McGraw-Hill 250,000

Meredith Corp. 2,000

PPG Industries 3,000

Pfizer 1,000

SBC Communications 2,000

Xerox 3,000

Minimum private 1,000

Maximum private 250,000
Page 38 GAO-03-42 PP&E Policy Survey

Appendix VI

Capitalization Thresholds for Real Property ApendxiVI

a

Federal agency did not report a capitalization threshold for this property category.

Source: GAO analysis of survey data.

Federal agencies Buildings

Building

improvements

Other structures

and facilities

Leasehold

improvements

Agriculture $5,000 $5,000 $5,000 $5,000

Bureau of Prisons 100,000 100,000 100,000 100,000

Bureau of 

Reclamation 0 0 0 0

Education aa a 50,000

Energy 25,000 25,000 25,000 25,000

FAA 25,000 25,000 25,000 25,000

GSA 0 10,000 10,000 10,000

NASA 100,000 100,000 100,000 100,000

NOAA 200,000 a 200,000 200,000

SSA 0 a a 25,000

State 0 250,000 a 250,000

TVA 25,000 25,000 25,000 25,000

USPS 0 5,000 a 5,000

VA 25,000 25,000 25,000 25,000

Minimum federal 0 0 0 0

Maximum federal 200,000 250,000 200,000 250,000
Appendix VI

Capitalization Thresholds for Real Property

Page 39 GAO-03-42 PP&E Policy Survey

Source: GAO analysis of survey data.

Private sector 

companies Buildings

Building

improvements

Other structures

and facilities

Leasehold

improvements

Allstate $0 $500 $0 $500

Boeing 5,000 5,000 5,000 5,000

ExxonMobil 3,000 3,000 3,000 3,000

Fluor 1,500 1,500 1,500 1,500

Gillette 2,500 2,500 2,500 2,500

Kaiser Permanente 0 5,000 5,000 5,000

McGraw-Hill 2,000 2,000 2,000 2,000

Meredith Corp. 5,000 5,000 5,000 5,000

PPG Industries 3,000 3,000 3,000 3,000

Pfizer 1,000 1,000 1,000 1,000

SBC 

Communications 2,000 2,000 2,000 2,000

Xerox 3,000 3,000 3,000 3,000

Minimum private 0 500 0 500

Maximum private 5,000 5,000 5,000 5,000
Page 40 GAO-03-42 PP&E Policy Survey

Appendix VII

Useful Life Ranges for Personal Property (in 

Years) ApendxiVI

Note: N/R indicates that survey participant either did not respond to a useful life classification for this 

particular category of personal property or the category did not apply to the participant.

Source: GAO analysis of survey data.

Federal agencies Equipment

Furniture

 and fixtures

Motor

vehicles

Agriculture 5 8 6

Bureau of Prisons 10 N/R 10

Bureau of Reclamation 2 - 25 10 - 20 6 - 10

Education 3 5 N/R

Energy 5 - 40 varies 5 - 8

FAA 7 7 5

GSA 5 5 varies

NASA 5 - 15 10 10

NOAA 8 - 20 N/R 6

SSA 7 10 N/R

State 5 - 8 4 - 12 3 - 6

TVA 5 - 20 5 - 10 6 - 12

USPS 3 - 10 5 - 10 6 - 12

VA 3 - 15 10 - 15 5 - 10

Range 2 - 40 4 - 20 3 - 12
Appendix VII

Useful Life Ranges for Personal Property (in 

Years)

Page 41 GAO-03-42 PP&E Policy Survey

Note: N/R indicates that survey participant either did not respond to a useful life classification for this 

particular category of personal property or the category did not apply to the participant.

Source: GAO analysis of survey data.

Private sector companies Equipment

Furniture

and fixtures

Motor

vehicles

Allstate 3 - 10 10 3

Boeing 3 - 11 10 N/R

ExxonMobil 3 - 5 15 5 - 10

Fluor 5 - 7 10 5

Gillette 5 - 20 3 - 15 3 - 7

Kaiser Permanente 3 - 20 5 - 20 4

McGraw-Hill 2 - 10 10 3

Meredith Corp. 3 - 10 5 - 10 3 - 10

PPG Industries 5 - 25 3 - 20 6 - 10

Pfizer 3 - 5 13 4

SBC Communications 10 15 8

Xerox 3 - 12 15 4 - 5

Range 2 - 25 3 - 20 3 - 10
Page 42 GAO-03-42 PP&E Policy Survey

Appendix VIII

Useful Life Ranges for Real Property (in 

Years) ApendxiVI

Note: N/R indicates that survey participant either did not respond to a useful life classification for this 

particular category of real property or the category did not apply to the participant.

a

Other includes any real property that is not a building, structure, or facility. 

Source: GAO analysis of survey data.

Federal agencies Buildings

Other structures

and facilities Othera

Agriculture 30 20 - 50 10 - 50

Bureau of Prisons 30 20 20

Bureau of Reclamation 30 - 75 25 - 100 30 - 75

Education N/R N/R N/R

Energy 25 - 50 25 - 50 varies

FAA 40 10 - 20 10

GSA 30 30 5 - 20

NASA 40 15 15

NOAA 10 - 40 N/R varies

SSA 50 N/R 6

State 30 N/R 10

TVA 20 - 40 20 - 40 20

USPS 30 - 75 10 N/R

VA 5 - 40 5 - 40 5 - 40

Range 5 - 75 5 - 100 5 - 75
Appendix VIII

Useful Life Ranges for Real Property (in 

Years)

Page 43 GAO-03-42 PP&E Policy Survey

Note: N/R indicates that survey participant either did not respond to a useful life classification for this 

particular category of real property or the category did not apply to the participant.

a

Other includes any real property that is not a building, structure, or facility.

Source: GAO analysis of survey data.

Private sector companies Buildings

Other structures

and facilities Othera

Allstate 40 N/R N/R

Boeing 45 N/R 10 - 25

ExxonMobil 20 - 50 20 - 30 20 - 30

Fluor 20 - 30 N/R 20 - 30

Gillette 10 - 40 40 14 - 20

Kaiser Permanente 20 - 40 10 - 40 5 - 25

McGraw-Hill 50 N/R 50

Meredith Corp. 10 - 45 20 10 - 20

PPG Industries 20 - 50 N/R 20 - 30

Pfizer 33 N/R 33

SBC Communications 44 N/R N/R

Xerox 25 - 50 N/R 20

Range 10 - 50 10 - 40 10 - 50
Page 44 GAO-03-42 PP&E Policy Survey

Appendix IX

Federal Agency Survey ApendxiIX
Appendix IX

Federal Agency Survey

Page 45 GAO-03-42 PP&E Policy Survey
Appendix IX

Federal Agency Survey

Page 46 GAO-03-42 PP&E Policy Survey
Appendix IX

Federal Agency Survey

Page 47 GAO-03-42 PP&E Policy Survey
Appendix IX

Federal Agency Survey

Page 48 GAO-03-42 PP&E Policy Survey
Appendix IX

Federal Agency Survey

Page 49 GAO-03-42 PP&E Policy Survey
Appendix IX

Federal Agency Survey

Page 50 GAO-03-42 PP&E Policy Survey
Appendix IX

Federal Agency Survey

Page 51 GAO-03-42 PP&E Policy Survey
Appendix IX

Federal Agency Survey

Page 52 GAO-03-42 PP&E Policy Survey
Appendix IX

Federal Agency Survey

Page 53 GAO-03-42 PP&E Policy Survey
Appendix IX

Federal Agency Survey

Page 54 GAO-03-42 PP&E Policy Survey
Appendix IX

Federal Agency Survey

Page 55 GAO-03-42 PP&E Policy Survey
Page 56 GAO-03-42 PP&E Policy Survey

Appendix X

Private Sector Company Survey ApendxiX
Appendix X

Private Sector Company Survey

Page 57 GAO-03-42 PP&E Policy Survey
Appendix X

Private Sector Company Survey

Page 58 GAO-03-42 PP&E Policy Survey
Appendix X

Private Sector Company Survey

Page 59 GAO-03-42 PP&E Policy Survey
Appendix X

Private Sector Company Survey

Page 60 GAO-03-42 PP&E Policy Survey
Appendix X

Private Sector Company Survey

Page 61 GAO-03-42 PP&E Policy Survey
Appendix X

Private Sector Company Survey

Page 62 GAO-03-42 PP&E Policy Survey
Appendix X

Private Sector Company Survey

Page 63 GAO-03-42 PP&E Policy Survey
Appendix X

Private Sector Company Survey

Page 64 GAO-03-42 PP&E Policy Survey
Appendix X

Private Sector Company Survey

Page 65 GAO-03-42 PP&E Policy Survey
Page 66 GAO-03-42 PP&E Policy Survey

Appendix XI

Comments from the Department of 

Agriculture ApendxiXI

Now on p. 11.

Now on p. 30.

Now on p. 38.
Appendix XI

Comments from the Department of 

Agriculture

Page 67 GAO-03-42 PP&E Policy Survey

Now on p. 4.

Now on p. 4.
Appendix XI

Comments from the Department of 

Agriculture

Page 68 GAO-03-42 PP&E Policy Survey
Page 69 GAO-03-42 PP&E Policy Survey

Appendix XII

Comments from the Department of the 

Interior ApendxiXI

Now on p. 13.
Appendix XII

Comments from the Department of the 

Interior

Page 70 GAO-03-42 PP&E Policy Survey
Page 71 GAO-03-42 PP&E Policy Survey

Appendix XIII

Comments from the National Aeronautics and 

Space Administration ApendxXiI

Now on p. 5.

Now on p. 18.
Page 72 GAO-03-42 PP&E Policy Survey

Appendix XIV

Comments from the Department of State ApendxXiIV
Appendix XIV

Comments from the Department of State

Page 73 GAO-03-42 PP&E Policy Survey

Now on p. 10.
Appendix XIV

Comments from the Department of State

Page 74 GAO-03-42 PP&E Policy Survey
Appendix XIV

Comments from the Department of State

Page 75 GAO-03-42 PP&E Policy Survey
Page 76 GAO-03-42 PP&E Policy Survey

Appendix XV

Comments from the Department of the 

Treasury ApendxXiV
Appendix XV

Comments from the Department of the 

Treasury

Page 77 GAO-03-42 PP&E Policy Survey

Now on pp. 18-19.

Now on p. 10.

Now on p. 22.
Appendix XV

Comments from the Department of the 

Treasury

Page 78 GAO-03-42 PP&E Policy Survey

Now on p. 12.

Now on pp. 17-18.
Page 79 GAO-03-42 PP&E Policy Survey

Appendix XVI

GAO Contact and Staff Acknowledgments ApendxXiVI

GAO Contact Mary Arnold Mohiyuddin, (202) 512-3087

Acknowledgments Staff members making key contributions to this report were Linda J. 

Brigham, Amy C. Chang, Francine M. DelVecchio, Cleggett S. Funkhouser, 

Stuart M. Kaufman, David C. Merrill, and Lisa M. Warde.

(192021)
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Appendix XVI

GAO Contact and Staff Acknowledgments

Page 81 GAO-03-42 PP&E Policy Survey

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Page 1 GAO-03-42 Financial Management

Contents

Table 1: Capitalization Threshold Ranges for Personal Property 14

Table 2: Capitalization Threshold Ranges for Real Property 16

Table 3: Useful Life Ranges for Personal Property 20

Table 4: Useful Life Ranges for Real Property 20
Contents

Page 2 GAO-03-42 Financial Management
Page 1 GAO-03-42 Financial Management

Contents

Figure 1: Increase in Capitalization Threshold Levels at Federal 

Agencies 11

Figure 2: Percentage of Federal Agencies and Private Sector

Companies at Various Software Capitalization Threshold

Levels 15