NASA Procedural Requirements

NPR 9250.1C Effective Date: October 29, 2015 Expiration Date: May 18, 2024

Subject: Property, Plant, and Equipment and Operating Materials and Supplies

Responsible Office: Office of the Chief Financial Officer

Chapter 3 Real Property

3.1 Overview

3.1.1 This chapter sets forth the accounting standards and policies related to NASA's real property to assure compliance with statutory and regulatory requirements. These requirements ensure financial control over NASA-owned real property, including NASA property in the possession of contractors.

3.1.2 This chapter applies to all NASA-owned real property, including NASA real property in the possession of contractors.

3.2 Roles and Responsibilities

3.2.1 Refer to Section 1.6 of this NPR document.

3.3 Capitalization Criteria and Identification

3.3.1 Real property PP&E consists of buildings, facilities, and other structures. Therefore, NASA shall capitalize new construction or acquired real property PP&E which meet all of the following criteria:

a. Have a unit total cost (see Section 2.2) of $500,000 or more.

b. Have an estimated useful life of two years or more.

c. Have been acquired or constructed with the intention of being used, or being available for use, by NASA.

3.3.1.1 Items not meeting the above criteria will be expensed in the period(s) costs are incurred.

3.3.2 Modifications to existing real property PP&E are considered single events and should be capitalized as capital improvements when the modifications have an individual cost of $500,000 or more and meet one of the following criteria:

a. Extend the useful life of the asset by two years or more.

b. Enlarge or improve its capacity.

c. Otherwise upgrade it to serve needs different from, or significantly greater than, those originally intended.

3.3.2.1 Capital Improvements are capitalized and depreciated. Modifications that do not meet the capitalization criteria are expensed.

3.3.2.2 Costs of acquiring real property and improvements meeting the capitalization criteria will be segregated for identification and tracking through the establishment of unique WBS elements with capital asset indicators.

3.3.2.3 Maintenance costs incurred to maintain an asset in a useable condition do not meet the criteria for capitalization. Therefore, these costs are expensed when incurred.

3.4 Recognition

3.4.1 WIP (Assets Under Construction).

3.4.1.1 Costs of new construction or improvement of real property that meet the capitalization criteria outlined above will be captured as WIP through the establishment of unique WBS elements with capital asset indicators until the asset is beneficially occupied or placed in service, whichever occurs first.

3.4.1.2 The status of each new construction or capital improvement real property project recorded in WIP should be monitored on a monthly basis based on the percentage of completion. Once a project has reached 90 percent completion, information must be obtained to determine if the beneficial occupancy has been issued or the PP&E has been placed in service.

3.4.1.3 When PP&E being recorded in WIP is complete or beneficially occupied, the total capital cost recorded as WIP will be transferred to Capital PP&E. The capital balances transferred from WIP must be supported by sufficient supporting documentation, and any variances between the amount transferred and the supporting documentation must be reviewed and approved by NASA - Agency Director of Financial Management prior to processing any manual adjustments.

3.4.1.4 Capitalization will begin on the earlier of the date the PP&E are placed in service or the beneficial occupancy date. This event is defined as the date on which the facility or improvement to a facility is available for use by NASA. The capitalization of WIP will not be delayed pending final acceptance of residual closeout work, such as punch lists.

3.4.1.5 Year End. At fiscal year-end, special care shall be taken to ensure that real property PP&E meeting capitalization criteria, including beneficial occupancy, are capitalized in the amount of the costs incurred up to that time, regardless of whether or not any of those costs remain unpaid.

3.4.2 The cost of Real Property PP&E constructed by or through foreign governments or in foreign countries under NASA contracts will be capitalized in accordance with the title rights contained in formal agreements.

3.4.3 When a party other than NASA constructs a facility that becomes NASA PP&E under the terms of a reimbursable agreement, that property will be capitalized at the estimated fair market value of the facility, if the actual cost is not provided by the party that constructed the facility.

3.5 Valuation

3.5.1 Capitalized values will include all costs incurred to bring PP&E to a form and location suitable for its intended use as outlined in Section 2.2 of this NPR.

3.5.2 Where a replacement of a component occurs due to a capital improvement, such as utility system in a facility, the accounts will be appropriately adjusted to remove the values of items replaced (where those original values are $500,000 or more). If only a portion of the property is being replaced and that portion is not separately identifiable in the accounting records, the value of the replaced portion must be estimated and the accounts adjusted accordingly. Removal of an item's recorded cost will be treated as a separate accounting transaction from the recording of additions or replacements. Replacements due to maintenance should be expensed.

3.5.3 If a reduction in the capitalized value of an asset occurs because of a modification and causes the value of the asset to drop below $500,000, it should be removed from the general ledger accounts for capitalized PP&E.

3.5.4 Real property that is identified during inspections or inventories that has not been recorded should be valued at its estimated value based on similar items, engineering estimates, or other reasonably supportable methodologies, if supporting documentation for the original item is not available. The capitalization threshold in effect on the date the item is discovered will be applied to determine whether to capitalize the item.

3.6 Depreciation

3.6.1 See Section 2.5 for depreciation methods.

3.6.2 The useful life of acquired or constructed real property and capital modifications will be the recovery period as shown in Table 3.1 of this NPR.

3.6.3 Real Property PP&E acquired or constructed, or modifications that meet the capitalization criteria should be capitalized individually and depreciated over the recovery periods for modifications shown in Table 3.1.

3.6.4 Real Property Not Fully Depreciated. Modifications to real property that is not fully depreciated, that meet the capitalization criteria will be capitalized and depreciated over the recovery periods for modifications shown in Table 3.1.

3.6.5 Real Property Modifications When The Asset Being Modified Is Fully Depreciated. Modifications to real property that is fully depreciated, that meet the capitalization criteria will be capitalized individually and depreciated over the recovery periods for modifications shown in Table 3.1.

Table 3.1, Recovery Periods For Real Property Assets

3.7 Impairment Loss

See Section 2.6.

3.8 Deferred Maintenance and Repairs

See Section 2.7.

3.9 Real Property not in use

See Section 2.4.3.

3.10 Disposal

See Section 2.4.2.

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