QHRRP 9000-305

Capitalization Policy

 

Review/update responsibility
 Finance
Revision
 14 Oct 2024
Reference
 CCRE Article II Section 2.1(c)
Policy
 Capitalization guidelines issued by the American Institute of Certified Public Accounts (AICPA) for Common Interest Realty Associations (CIRAs) will be used to determine when community common property and equipment will be capitalized and when it will be expensed.
Common real property
 Common “Real Property” for which the Association has title that is not directly associated with a Unit AND one of the following criteria is met:

  • The BOD CAN dispose of for cash or claims to cash; or
  • The property is used by the Association to generate significant cash flows from members based on usage or from non-members.
Sell, convey or transfer
 CCRE Article II Section 2.1(c) provides: “The right of the Association to sell, convey, or transfer the Common Property or any portion thereof to any third party other than those described in Subsection (b) for such purposes and subject to such conditions as may be approved by two-thirds vote of the Board of Directors subject to the requirements of the Permits.”  Subsection (b) refers to easements granted to utility companies.  Accordingly, the Association may dispose of common property assets by consent of two-thirds majority of the Board of Directors including…

  • Sports complex building
  • Pool and pool area
  • Tennis and pickleball courts, fencing and related facilities.
  • Maintenance building
  • Pavilion
  • POA office building
  • Fitness Facility
  • Playground
  • Marina
  • Underlying sports complex land
Community personal property
 Community “Personal Property” used in operating, maintaining, and replacing common property and providing services. Examples include…

  • Work Vehicles
    • Boats
    • Vehicles
  • Maintenance Equipment
  • Furnishings
  • Office and Recreational Equipment
    • Office equipment
    • Fitness equipment
    • Tennis equipment
    • Pickleball equipment
    • Pool equipment
Capitalization threshold
 The BOD has established $10,000 as the minimum threshold for capitalization.  Therefore, if common property or equipment meets the above criteria for capitalization but is under $10,000 it will be expensed.