Country Club Capitalization – Are You Doing it Right?

Cooling Tower

The end of the year is fast approaching and so is the need to make sure your books are in order. Chances are your operation did some type of capital project or purchase during the last 12 months. Are you booking the expense the proper way? As a Golf Course Superintendent, you are responsible for millions of dollars of assets and yearly capital projects. Often you are mid-project during the summer when you are asked to plan the following summer project. This is the time to stay focused and to educate your Board or Committee on how to navigate through this process. If everyone understands the process you might be able to increase your capital budget and knock out more items at one time. I have put together a list of items and how they should be accounted for on your Club’s books.

Below are some suggested guidelines to follow for a Fixed Asset Policy for a Country Club and Golf Course:

Expenditure and Recommended Treatment

ITEMS TO EXPENSE

-Interior Painting (Existing Area) Expense
No Tax Life – No Book Life

-Road/Cart Path Repairs Expense
No Tax Life – No Book Life

-Sod to Repair Damaged Areas Expense
No Tax Life – No Book Life

-Parking Lot Sealing Expense
No Tax Life – No Book Life

-Annual Planting in Existing Landscaping Areas Expense
No Tax Life – No Book Life

-Seed and Sand for Existing Areas Expense
No Tax Life – No Book Life

-Rock for Existing Areas Expense
No Tax Life – No Book Life

-Small Tools and Equipment Expense
No Tax Life – No Book Life

-Wallpapering (Replacement of Old) Expense
No Tax Life – No Book Life

-Replacement of Damaged Sprinkler Heads on Existing Irrigation System Expense
No Tax Life – No Book Life

-Inexpensive Repair or Replacement Part for Existing Equipment Expense
No Tax Life – No Book Life

-Carpeting (Ordinary Replacement) Expense
No Tax Life – No Book Life

-Locks, Latches & Keys (Non-Renovation) Expense
No Tax Life – No Book Life

Irrigation Control Boxes

ITEMS TO CAPITALIZE
-Carpeting and Tile (Renovation) Capitalize
Tax Life 5 Years – Book Life 5 Years

-Water Heaters Capitalize
Tax Life 7 Years – Book Life 7 Years

-Fitness Equipment Capitalize
Tax Life 7 Years – Book Life 5 Years

-Curtains, Shades & Drapes Capitalize
Tax Life 7 Years – Book Life 5 Years

-Kitchen Equipment Capitalize
Tax Life 7 Years – Book Life 5 or 7 Years

-Linens, silverware etc. (New set) Expense
Tax Life 7 Years – Book Life 3 to 5 Years

-Replacement Linens, silverware etc. Expense
No Tax Life – No Book Life

-Food Dispensing Equipment
(“Smallwares” may be expensed for tax) Capitalize
Tax Life 7 Years – Book Life 5 to 7 Years

-Furniture Capitalize
Tax Life 7 Years – Book Life 7 Years

-Golf Carts Capitalize
Tax Life 7 Years – Book Life 5 Years

-Golf Course Equipment Capitalize
Tax Life 7 Years – Book Life 7 Years

-Locks, Latches & Keys (Renovations) Capitalize
Tax Life 7 Years – Book Life 7 Years

-Televisions Capitalize
Tax Life 7 Years – Book Life 5 Years

-New Engines for Mowers Capitalize
Tax Life 7 Years – Book Life 5 Years

-Entrance Gates Capitalize
Tax Life 15 Years – Book Life 15 Years

-Trees Capitalize
Tax Life 15 Years – Book Life 15 Years

-New Greens and Bunkers Capitalize
Tax Life 15 Years – Book Life 15 Years

-New Cart Paths Capitalize
Tax Life 15 Years – Book Life 15 Years

-Parking Lot Resurfacing Capitalize
Tax Life 15 Years – Book Life 15 Years

-Building New Fences Capitalize
Tax Life 15 Years – Book Life 15 Years

-Landscaping New Projects Capitalize
Tax Life 15 Years – Book Life 15 Years

-Ties and Concrete Capitalize
Tax Life 15 Years – Book Life 15 Years

-Seed and Sand for New Construction Capitalize
Tax Life 15 Years – Book life 15 Years

-Shrubbery Capitalize
Tax Life 15 Years – Book Life 15 Years

-Rock for New Areas Capitalize
Tax Life 15 Years – Book Life 15 Years

-Additions for Irrigation Systems Capitalize
Tax Life 15 Years – Book Life 15 Years

-Building Improvements/Renovations Capitalize
Tax Life 39 Years – Book Life 39 Years

-Exterior Painting Capitalize
Tax Life 39 Year – Book Life 10 Years

-Wallpapering (New Construction) Capitalize
Tax Life 39 Years – Book Life 10 Years

-Interior Painting (New Construction) Capitalize
Tax Life 39 Years – Book Life 10 Years

Note: Long-term assets and renovations attached to a facility under lease should be depreciated/amortized over the shorter of (1) the life of the lease or (2) the recommended asset life.

I hope this information is helpful in keeping you ahead of your accounting office. Please use these guidelines in concert with your Club’s accounting practices and todays current IRS rules. They should be the same.

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