State of Texas – Fiscal Management

Manual of Accounts

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Expenditure Object 7350 – Real Property - Buildings - Capital Lease
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Object Type: Cash — Real Property
Reference:

Please refer to AG Opinion JC-170 and Art. VII, Sec. 18(i) of the Texas Constitution for information on certain restrictions on construction and related expenditures with GR and GR-dedicated funds by Institutions of Higher Education.

Specific definitions for capitalized, controlled and expensed asset classifications are located in the SPA Process Users Guide.
Issue Date: 1993-01-01
Revised Date: 2004-09-01

Description


To record payment on a capital lease for a building.

Expenditure code 7350 includes, but is NOT limited to:

  • Buildings (lease/purchase)


Notes


To qualify as a capital lease, the lease agreement must meet any one of the following criteria:

  • The lease transfers ownership of the property to the lessee by the end of the lease term.
  • The lease contains a bargain purchase option.
  • The lease term is equal to 75 percent or more of the estimated economic life of the lease property.
  • The present value of the minimum lease payments at the inception of the lease, excluding executory costs, equals at least 90 percent of the fair value of the lease property.

If the asset meets or exceeds the capitalization threshold of $100,000, it must be reported to SPA and in the financial statements as a capital asset.



USAS Values


Appropriation Year 26
USAS Title RP-BUILDING/CAPITAL LEASE
Object Group 10 – Expenditures
USAS Status A
Rev/Exp Category 13 – CAPITAL OUTLAY



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