Budget Box: Asset Depreciation Threshold

The Landings Association has more than 1,000+ components recorded in our Capital Asset Management Plan (CAMP) for 2024, totaling $62,754,410 in current component replacement cost. This includes assets from computers and cameras to bridges and marina dry stacks. In 2025, TLA plans to increase its asset depreciation threshold from the current state of a minimum cost of $1,000 and 3-years useful life to, a minimum cost of $5,000 and 3-years useful life.

   What does this mean? It means all assets previously recorded in TLA’s CAMP under the new minimum depreciation threshold of $5,000 and 3-years useful life will be moved out of the Capital Reserves Budget and funded through the Operating Budget. There will be a total number of 196 assets transferred, which includes several smaller components such as computers, cameras, AEDs, HVAC units, and more. These assets will be moved to various expense accounts in TLA’s Operating Budget equal to a total of $505,421. For Example, in the year 2025, there will be a total of 27 assets, a cost of $60,205, that will be moved from the Capital Reserves Budget to the Operating  Budget.

   Therefore, Capital expenses will be reduced, and Operating expenses will increase by the same amount. The depreciation threshold will have no impact on TLA’s cash flow and/or asset replacement cycle.