The repairs category includes the expenses of repairing buildings and equipment items. These expenses include services performed by either the NDSU Physical Plant Department, or an outside contractor.

Repairs - (TCC 471) - should be used for expenditures incurred to maintain a plant asset in its normal good state of operation and do not extend the asset's useful life. Examples include: replacement or repair of floor covering or roofs, reconditioning by replacing small parts, painting, or regular maintenance costs. Expenditures in this TCC will not be added to the plant asset's book value.

If the cost of subsequent enhancements or add-ons are $750.00, or less (per equipment item or building upgraded), the enhancement/add-on should be coded TCC 471 (or TCC 716 or 717 if charged to a plant fund). These costs are considered minor enhancements/add-ons and they will not be capitalized.

If the cost of subsequent enhancements or add-ons are greater than $750.00 (per equipment item or building upgraded), the enhancement/add-on should be coded either TCC 475 or 631(or TCC 702- 711, if charged to a plant fund). These costs are considered major enhancements/add-ons and will be capitalized by increasing the capitalization value of the improved asset.

Definitions:

Subsequent enhancements and add-ons represent either the replacement of a portion of an existing asset; or, the addition to an existing asset that is either permanently attached or attached in a way that it becomes a necessary part of the existing item. The new portion replaced/added is an improved or superior asset, usually at a cost materially in excess of the replaced item. Subsequent enhancements/add-ons result in a better, more efficient, or more productive asset. For instance, the replacement of a computer hard disk drive with a drive with a greater storage capacity.

Maintenance contracts - (TCC 472) - should be used for payments on contracts for regular repair and maintenance, as needed, on plant assets. Example: Xerox copy machine contracts. This TCC could be used for warranty costs that are separately identified. These expenditures would not be added to the book value of the asset.

Sublet services - (TCC 473) - Used for payments to outside vendors for repair or maintenance services that otherwise would be performed by the department. Subject to 1099 reporting.

Repairs - Labor - (TCC 474) - should be used for the labor portion of non-capitalizable repairs. If the labor portion of a non-capitalizable repair is not separately identified, use TCC 471 for the entire expense. Expenditures coded TCC 474 will not be added to the book value of land, buildings, or equipment. An example would technical service time and mileage that is separately identified on an invoice. Service calls should be assumed to be all labor unless parts are identified on an invoice. Subject to 1099 reporting.

Capitalized Repairs - (TCC 475) - should be used if the cost of subsequent enhancements or add-ons are greater than $750.00, the enhancement/add-on should be coded either TCC 475 or 631(or TCC 702- 711, if charged to a plant fund). These costs are considered major enhancements/add-ons and will be capitalized by increasing the capitalization value of the improved asset.

Capitalized Repairs - Labor - (TCC 476) - should be used for the labor portion of capitalizable repairs, in all funds, other than plant funds. Expenditures coded TCC 476 will be added to the plant asset's book value. Subject to 1099 reporting.

It is important to separate out the labor cost, when possible, since IRS regulations require that 1099 forms be sent to vendors (except for corporations, and tax exempt organizations) for the labor portion of repairs. It is important to separate out the improvement/capitalizable portion of the cost, since the capitalizable TCCs are used to increase the value of land improvements, buildings, and equipment.