Hubbell Policies

CAPITALIZATION OF PROPERTY, PLANT AND EQUIPMENT POLICY

English

Owner : Vice President, Controller

Last Review: 2015.09.05

FIN - 07

Department: Finance

POLICY This policy requires all capitalization of property, plant and equipment ("PPE") to be reported in accordance with established procedures and guidelines. SCOPE This policy applies to all Hubbell business units. PURPOSE The purpose of this policy is to ensure compliance with United States Generally Accepted Accounting Principles ("GAAP") and to ensure consistency in the application of these principles across all Hubbell business units in accounting for PPE. PROCEDURE All property, plant and equipment (“PPE”) items, excluding laptops and personal computers, with a total cost exceeding $5,000 per unit of property (“UoP”) (net of purchase discounts, including delivery fees, installation fees, permits and other facilitative costs) and a useful life in excess of one year are to be capitalized. Internal labor costs should not be capitalized and may only be capitalized when an exception to this procedure is granted by the Corporate Controllers office. M&E and other assets that are less than $5,000 in value but are purchased together and are functionally interdependent components of a system or project may be capitalized. For example, this will include furniture and equipment items that are individually less than $5,000 but are part of a project involving a renovation or office move. Supplies and spare parts are addressed later in this procedure. Each item of PPE should be individually identified in the fixed asset subledger with, at a minimum, the following items recorded: installed cost, location, acquisition date, useful life, fixed asset account number, tag number and fixed asset location. Each capitalized asset should be tagged, labeled, or engraved with an identification number prominently affixed when the asset is installed and recorded in the property records. Capital investments for betterment, adaptation or restoration, exceeding the stated cost and useful life threshold should be capitalized and included in the fixed asset subledger. Routine and recurring maintenance amounts paid to keep a UoP in ordinary efficient working condition should be expensed as incurred. SUPPLIES Incidental - Expensed when incurred. Non-Incidental - Under $5,000, Expense when incurred. Non-Incidental - Over $5,000, Capitalize and expense when consumed. Spare parts - Under $5,000, Expense when incurred.

30