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Overview of Fixed Assets Management in Construction Projects: A Training Review

This comprehensive review focuses on the management and accounting for fixed assets within construction projects, specifically the construction-in-process (CIP) for the 383 Madison Renovations project. Presented by Lisa Sockwell and Georgi Stavrev, the session covers crucial elements such as invoice accuracy, project budgeting, asset settlement criteria, and accounting treatments. Emphasis on reconciling PTS to SAP and utilizing macros for reporting enhances clarity. The training also discusses distinctions between leased and owned properties, depreciation methods, and the impact on financial statements.

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Overview of Fixed Assets Management in Construction Projects: A Training Review

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  1. Spotlight TrainingProject ReviewsConstruction in Process Fixed Assets Offered by: Training & Development Team Presenters: Lisa Sockwell & Georgi Stavrev Real Estate Project Accounting December 6, 2010

  2. Project Reviews High level review to ensure accuracy • All architect & GC invoices in detail • Remainder are quantified per accounting treatment • PA settlement 80%, we review 79% • Precursor to fixed asset settlement Log updated weekly with materiality & assignment Macro utilized to format 5 queries • General Project Overview • Owned / Leased, project scope • BCC / CCC, budget set up • Reconcile PTS to SAP, Asset Balances – 7 excel tabs total • Proposed journal entries – if closed, 10k threshold • Electronic and hardcopy file saved for Audit

  3. Project Reviews 383 Madison-Renovations to Move SLF team Project 100071789

  4. Project Reviews 383 Madison-Renovations to Move SLF team Project 100071789

  5. Construction in Process (CIP) SAP Yes Criteria for budget set up • Minimum 50k threshold, multiple asset classes required • Milestone dates monitored & reported to Team Mumbai • Asset settlement auto & manual based on initiative Macro utilized, formats 6 queries, Phase 1 • WIP report has 44 columns, 4369 lines of data • Asset Analysis – provides a “numbers only” report to Caroline Pawlak • Status comments – obtained from additional reports or PM Presented to Keith Jordan monthly, Phase 2 • Final report represents ALL financial data in 15 tabs • LOB breakdown, WAMU initiative, & 5 project summaries • 8832 projects, total assets posted $2.24 billion

  6. Construction in Process (CIP)

  7. Construction in Process (CIP)

  8. Fixed Assets Fixed assets, a.k.a. Property, Plant, & Equipment • items, which businesses use for extended period of time • provide benefit for more than one operating cycle (one year or longer) • land, buildings, motor vehicles, furniture, office equipment etc Accounting for Fixed Assets • record on books using historical cost (purchase price) • depreciate over its useful life - 5, 7, 15, 20 etc. years • book depreciation differs from tax depreciation 10 yr vs. 39 yr for Building Interior • effect on financial statements and ratios

  9. Fixed Assets Leased vs. Owned properties • Properties can be Leased or Owned • Owned properties • record assets on books for purchase price • depreciate over the asset’s normal useful life • Leases can be Capital or Operating • Operating lease properties • do not record assets on books • similar to rental contract • Capital lease properties and leasehold improvements • depreciate over the remaining lease life • asset’s normal useful life

  10. Fixed Assets JPMorgan Chase Fixed Asset • Grouped in asset classes - #3090 Signage, #3185 Aircraft • Capitalization thresholds • $1K for Furniture, Bank equipment, Signage • $25K for Roofing, HVAC, Paving • $50K for Building Interior & Structure • Fixed assets on Financial Statements • 2009 Annual Filings: http://files.shareholder.com/downloads/ONE/1084506287x0x362439/ a51db960-bda2-4e30-aacd-3c761b81ba75/2009_AR.pdf • Premises and Equipment (page 147 of Balance Sheet) • Depreciation Expense (page 146 of Income Statement)

  11. Any Questions…?

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