Hubbell Policies

CONSTRUCTION IN PROCESS POLICY

English

Owner : Vice President, Corporate Controller

Last Review: 2014.09.01

FIN - 11

Department: Corporate Accounting

POLICY

The Construction in Process policy describes the procedure for capitalizing property, plant and equipment for when a project has begun but is not yet complete.

SCOPE

This policy applies to all business units that have property, plant and equipment.

PURPOSE

The purpose of this policy and related procedure is to set the standard for capitalizing construction in process relating to property, plant and equipment.

PROCEDURE

Construction in Process (CIP) is an asset holding account for costs associated with a property, plant and equipment ( “ PPE ” ) project that has begun but is not yet complete and whose anticipated total project cost exceeds the PPE capitalization threshold defined in the “ Procedure for Capitalization of Property, Plant and Equipment ” .

Costs shall exclude the capitalization of interest unless an exception is granted by the Corporate Controller.

When a PPE project includes multiple individually identified assets, the costs associated with individually identified assets are to be transferred to PPE and depreciation must begin in the period the individually identified asset is available for use, regardless of whether it is currently being used or if other separately identified assets within the project are incomplete. Available spending under an approved authorization for expenditure ( “ AFE ” ) does not preclude placing an asset in service to begin depreciation.

Each PPE project, and any individually identified assets within that project must be assigned an expected date on which the project and individually identified asset will be available for use.

All CIP balances greater than $100K and related to an AFE that has been open greater than 12 months require the approval of the Corporate Assistant Controller to carry-over into the next calendar year. These requests must be made no later than December 15.

ADMINISTRATION

Roles and Responsibilities. Business unit controllers have responsibility in overseeing compliance with this policy.

Monitoring, Evaluation and Review.

1. Internal Audit reviews are preformed periodically at the discretion of the local, platform, or Corporate

management.

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