Building Componentization
Conversion to Depreciation by Component
Hirons & Associates valuation consultants are experienced in providing Fixed Asset Services that support:
- Property management standards
- Financial reporting requirements
- Federal cost reimbursement regulations
- Risk management compliance issues
- Financial and federal audit support
- Inventory perpetuation services
When you work with us, you will receive reports that provide accurate and consistent data to support your property management, financial, cost reimbursement and insurance initiatives. Our consultants will work closely with you to design property management services that specifically meet your needs. Our commitment to every client is complete satisfaction, from start to finish.
An example of our Fixed Asset Services is seen through our work with universities across the United States. In assisting universities with compliance of GASB 34/35 and FASB fixed asset financial reporting, Hirons & Associates has developed a sophisticated method for converting our clients from composite life building depreciation to building component cost segregation – componentized depreciation – in order to more accurately recover costs as they are accrued. Most Institutions depreciate building costs using a 50 or 40 year composite useful life. However, the individual components of a building typically do not last 50 or 40 years.
OMB A-21 and A-110 fixed asset cost reimbursement standards allow for additional segregation of costs within the 3 specific accounting categories: building, building services, and fixed equipment. The segregated component lives are shorter than the 50 or 40 year aggregate life currently being used for these calculations. Additionally, the ability to allocate depreciation of the segregated fixed equipment cost to the benefiting room – percentage of research by room – where the item(s) are inventoried optimizes overhead recoveries. Using componentized depreciation instead of composite life depreciation by building is beneficial to the institution. The calculation of the depreciation and method of allocation is the underpinning to this dramatic success.
You can discover more about our Fixed Asset Services and Building Componentization services by reaching us via phone, email, or in person.
Opportunity uncovered. Results secured. Contact Hirons & Associates today.