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					                                                                                6509.19_20
                                                                                Page 1 of 69




                                     FOREST SERVICE HANDBOOK
                                    NATIONAL HEADQUARTERS (WO)
                                          WASHINGTON, DC



            FSH 6509.19 - ASSET FINANCIAL MANAGEMENT HANDBOOK

                              CHAPTER 20 - REAL PROPERTY

Amendment No.: 6509.19-2011-1

Effective Date: February 3, 2011

Duration: This amendment is effective until superseded or removed.

Approved: DONNA M. CARMICAL                                   Date Approved: 02/01/2011
          Chief Financial Officer

Posting Instructions: Amendments are numbered consecutively by handbook number and
calendar year. Post by document; remove the entire document and replace it with this
amendment. Retain this transmittal as the first page(s) of this document. The last amendment to
this handbook was 6509.19-2010-1 to chapter 30.

New Document                      6509.19_20                                           69 Pages

Superseded Document(s) by         6509.19_20                                           70 Pages
Issuance Number and               (Amendment 6509.19-2009-2, 05/01/2009)
Effective Date

Digest:

20.1 - Adds new authority, Statement of Federal Financial Accounting Standard 35: Estimating
the Historical Cost of General Property, Plant, and Equipment-Amending Statements of Federal
Financial Accounting Standards 6 and 23.

20.4 - Updates coding in entire section, changes captions to reflect current organization structure,
and adds responsibilities for “Albuquerque Service Center (ASC), Director of Budget and
Finance;” “ASC, Branch Chief of the Property and Working Capital Branch;” “ASC, Real
Property Accounting Team;” “Real Property Accounting Representative;” “Director of
Acquisition Management;” “Director of Financial Policy” and “Director of Financial
Management Systems.”
WO AMENDMENT 6509.19-2011-1                                                                                         6509.19_20
EFFECTIVE DATE: 02/03/2011                                                                                          Page 2 of 69
DURATION: This amendment is effective until superseded or removed.

                          FSH 6509.19 - ASSET FINANCIAL MANAGEMENT HANDBOOK
                                        CHAPTER 20 - REAL PROPERTY


                                                         Table of Contents

  20.1 - Authority........................................................................................................................... 5
  20.2 - Objectives ......................................................................................................................... 5
  20.3 - Policy ................................................................................................................................ 5
  20.4 - Responsibility ................................................................................................................... 6
     20.41 - Washington Office, Chief Financial Officer .............................................................. 6
     20.41a - Director of Financial Management Systems ............................................................. 6
     20.41b - Director of Financial Policy ..................................................................................... 6
     20.42 - Washington Office, Deputy Chief of National Forest System ................................... 7
     20.43 - Washington Office, Director of Acquisition Management......................................... 7
     20.44 - Albuquerque Service Center, Associate Deputy Chief for Business Operations ....... 7
     20.44a - Albuquerque Service Center, Director of Budget and Finance ................................ 7
     20.44b - Albuquerque Service Center, Branch Chief of the Property and Working Capital
             Branch ......................................................................................................................... 8
     20.44c - Albuquerque Service Center, Real Property Accounting Team ............................... 8
     20.44d - Real Property Accounting Representative ................................................................ 9
     20.45 - Regional Foresters, Station Directors, Area Director, International Institute of
             Tropical Forestry Director, Forest Supervisors, Forest Products Lab Director, and
             Job Corps Center Directors ......................................................................................... 9
     20.45a - Regional Infra Coordinator ..................................................................................... 10
     20.46 - Forests ....................................................................................................................... 10
     20.46a - Engineering Staff Officer ........................................................................................ 10
     20.46b - Lands Staff Officer ................................................................................................. 11
     20.46c - Recreation Staff Officer .......................................................................................... 12
     20.46d - Contracting Officer/Purchasing Agent ................................................................... 12
     20.46e - Contracting Officer Representative ........................................................................ 13
     20.46f - Infra Data Steward................................................................................................... 14
  20.5 - Definitions ...................................................................................................................... 14
  20.6 - Project Groups ................................................................................................................ 21
  20.7 - Acronyms ....................................................................................................................... 27
21 - SYSTEMS .............................................................................................................. 28
  21.1 - Infra ................................................................................................................................ 28
  21.2 - I-Web .............................................................................................................................. 28
  21.3 - Corporate Property Automated Information System (CPAIS) ....................................... 28
  21.4 - Land Areas Report and Smalltracts System ................................................................... 30
  21.5 - Automated Timber Sale Accounting System ................................................................. 30
  21.6 - Work Plan System .......................................................................................................... 30
22 - REAL PROPERTY ACCOUNTING ....................................................................... 30
  22.1 - Asset Valuation – Methodologies .................................................................................. 30
  22.2 - Capitalization .................................................................................................................. 32
     22.21 - Threshold .................................................................................................................. 32
     22.22 - Primary Purpose Capitalization Criteria ................................................................... 34
WO AMENDMENT 6509.19-2011-1                                                                                       6509.19_20
EFFECTIVE DATE: 02/03/2011                                                                                        Page 3 of 69
DURATION: This amendment is effective until superseded or removed.

                          FSH 6509.19 - ASSET FINANCIAL MANAGEMENT HANDBOOK
                                        CHAPTER 20 - REAL PROPERTY


     22.23 - Work-in-Progress...................................................................................................... 35
     22.24 - Variable Stewardship Assets .................................................................................... 35
     22.25 - Treatment of Historic (Prior Year) Costs ................................................................. 36
     22.26 - Costs to Be Capitalized............................................................................................. 36
     22.27 - Capitalization versus Expense Determination .......................................................... 39
     22.28 - Documentation Responsibilities ............................................................................... 44
     22.28a - Albuquerque Service Center, Real Property Accounting Team ............................. 44
     22.28b - Contracting Officer and Contracting Officer Representative ................................. 45
     22.28c - Program Staff .......................................................................................................... 45
     22.28d - Property Management Officers and Technicians ................................................... 45
     22.28e - Unit Budget Officers ............................................................................................... 45
     22.29 - Documentation Requirements .................................................................................. 45
     22.29a - Actual Costs ............................................................................................................ 46
     22.29b - File Documentation Requirements ......................................................................... 47
23 - REAL PROPERTY LIFE CYCLE ........................................................................... 52
  23.1 - Identification of Real Property Projects ......................................................................... 52
  23.2 - Identification of Funding ................................................................................................ 53
     23.21 - Requests for Projects under $250,000 ...................................................................... 53
     23.22 - Request For Projects $250,000 and More ................................................................ 54
     23.23 - Work Plans ............................................................................................................... 54
     23.24 - Job Codes .................................................................................................................. 54
  23.3 - Planning .......................................................................................................................... 57
     23.31 - Construction.............................................................................................................. 58
     23.32 - Acquisition................................................................................................................ 59
  23.4 - Donation ......................................................................................................................... 60
     23.41 - Donated Land ........................................................................................................... 60
     23.42 - Reimbursable Agreements ........................................................................................ 60
     23.43 - Donated Goods and Volunteer Services ................................................................... 61
     23.44 - Job Corps Work Projects .......................................................................................... 61
  23.5 - Other Real Property ........................................................................................................ 61
     23.51 - Timber Sale Specified Road Credits......................................................................... 61
     23.52 - Roads Constructed Under the Provisions of Road Right-of-Way Construction and
             Use Agreements ........................................................................................................ 62
     23.53 - Roads Constructed by Those Other Than the Forest Service or Timber Purchaser . 63
     23.54 - Improvements Made by a Forest Service Concessionaire ........................................ 63
     23.55 - Asset Exchanges ....................................................................................................... 63
     23.56 - Abandoned Property ................................................................................................. 63
     23.57 - Additions or Improvements Made by Permittees ..................................................... 64
     23.58 - Found Assets ............................................................................................................. 64
     23.59 - Transfers-in ............................................................................................................... 64
  23.6 - Leased Assets ................................................................................................................. 65
  23.7 - Maintenance and Depreciation ....................................................................................... 65
  23.8 - Disposal of Real Property............................................................................................... 66
WO AMENDMENT 6509.19-2011-1                                                                                    6509.19_20
EFFECTIVE DATE: 02/03/2011                                                                                     Page 4 of 69
DURATION: This amendment is effective until superseded or removed.

                         FSH 6509.19 - ASSET FINANCIAL MANAGEMENT HANDBOOK
                                       CHAPTER 20 - REAL PROPERTY


     23.81 - Disposal Standards ................................................................................................... 67
     23.82 - Full and Partial Write-Off......................................................................................... 67
     23.83 - Road Decommissioning ............................................................................................ 68
     23.83a - Pre-FY 1995 Roads ................................................................................................. 68
     23.83b - Post-FY 1994 Roads ............................................................................................... 68
24 - OTHER REAL PROPERTY ................................................................................... 69
  24.1 - Heritage Assets ............................................................................................................... 69
  24.2 - Stewardship Assets and Land ......................................................................................... 69
WO AMENDMENT 6509.19-2011-1                                                      6509.19_20
EFFECTIVE DATE: 02/03/2011                                                       Page 5 of 69
DURATION: This amendment is effective until superseded or removed.

                      FSH 6509.19 - ASSET FINANCIAL MANAGEMENT HANDBOOK
                                    CHAPTER 20 - REAL PROPERTY


20.1 - Authority

Authority to acquire real property by purchase, donation, or lease is granted by Congress through
specific legislation that provides the necessary funds. Real property accounting policy is
prescribed in the following Standards:

         1. Statement of Federal Financial Accounting Standard No. 6, Accounting for Property,
         Plant, and Equipment. This standard contains accounting standards for Federally-owned
         property, plant, and equipment (PP&E); deferred maintenance on PP&E; and cleanup
         costs.

         2. Statement of Federal Financial Accounting Standard No. 35, Estimating the Historical
         Cost of General Property, Plant, and Equipment- Amending Statements of Federal
         Financial Accounting Standards 6 and 23. This standard clarifies those reasonable
         estimates of original transaction data historical cost may be used to value general
         property, plant, and equipment (GPP&E). The use of reasonable estimates is available to
         reporting entities that have not previously prepared financial reports but who may be
         required or elect to do so in the future and do not yet have adequate controls or systems to
         capture these costs. In addition, these amendments also apply in those cases where
         entities have decided to use estimates to determine the historical cost values of GPP&E.

20.2 - Objectives

The objective of this program is to provide accounting procedures and instructions for the
acquisition, maintenance, and disposal of real property assets.

20.3 - Policy

         1. Acquire real property only when it is needed for effective program operation.

         2. Acquire real property or construct improvements only if existing suitable
         Government-owned facilities are not available.

         3. Fully use and adequately maintain Forest Service property.

         4. Promptly report, as excess, property no longer needed subject to restrictions in the law
         under which it was acquired.

         5. Ensure accountability, accuracy, and the timeliness of the Agency’s reporting
         requirement for deferred maintenance. See FSH 6509.11k, section 57.
WO AMENDMENT 6509.19-2011-1                                                     6509.19_20
EFFECTIVE DATE: 02/03/2011                                                      Page 6 of 69
DURATION: This amendment is effective until superseded or removed.

                      FSH 6509.19 - ASSET FINANCIAL MANAGEMENT HANDBOOK
                                    CHAPTER 20 - REAL PROPERTY



20.4 - Responsibility

20.41 - Washington Office, Chief Financial Officer

It is the responsibility of the Chief Financial Officer (CFO) to ensure the quality and integrity of
the data in the Agency’s core financial system, currently the Foundation Financial Information
System (FFIS) and its subsidiary systems. In addition, prescribe policy that establishes financial
control over real property within the Forest Service.

20.41a - Director of Financial Management Systems

It is the responsibility of the Director of Financial Management Systems to:

         1. Implement new or enhanced financial and mixed systems;

         2. Maintain and operate financial and mixed systems; participate in the maintenance and
         operation of mixed systems;

         3. Document changes and modifications to financial systems and mixed systems; and

         4. Develop or obtain necessary system interfaces to maximize automation of the debit
         card program in conjunction with agency financial and mixed systems.

20.41b - Director of Financial Policy

It is the responsibility of the Director of Financial Policy to:

         1. Issue accounting standard and financial management policy and procedures governing
         Forest Service financial matters in accordance with statutory authorities, congressional
         intent, Appropriations Law, Treasury, and Office of Management and Budget regulations.

         2. Develop new and/or revised posting models; periodically analyze existing ones for
         validity and use.

         3. Serve as the principal advisor to the Chief, Deputy Chiefs, Washington Office staff
         directors and field offices on Agency appropriation use questions.

         4. Assist in the development and implementation of new accounting and financial
         management related business processes.
WO AMENDMENT 6509.19-2011-1                                                      6509.19_20
EFFECTIVE DATE: 02/03/2011                                                       Page 7 of 69
DURATION: This amendment is effective until superseded or removed.

                      FSH 6509.19 - ASSET FINANCIAL MANAGEMENT HANDBOOK
                                    CHAPTER 20 - REAL PROPERTY



20.42 - Washington Office, Deputy Chief of National Forest System

The Washington Office, Deputy Chief of National Forest Systems is responsible for ensuring
staff in their respective area coordinates with Budget, Finance, and AQM staffs to properly and
timely record and document costs incurred in the construction, installation, or disposition of
Property, Plant, and Equipment (PP&E) assets. Co-sign and issue the protocols for deferred
maintenance. This information is necessary for a complete and reliable compilation of Agency
financial statements.

20.43 - Washington Office, Director of Acquisition Management

The Director of Acquisition Management (AQM) is responsible for:

         1. Procuring, managing, and disposing of real property in compliance with Federal
         Acquisition Regulations and Federal Management Regulations.

         2. Planning, documenting, and reporting on real property physical inventories.
         Acquisition Management policies and procedures are provided in FSM 6440 and
         FSH 6409.31

20.44 - Albuquerque Service Center, Associate Deputy Chief for Business
Operations

The Forest Service Associate Deputy Chief for Business Operations is responsible for ensuring
that a program is established to manage the Property, Plant, and Equipment (PP&E) assigned to
Forest Service. Ensure that the Agency adheres to the authorities and regulations of PP&E that
is owned, leased, or managed by the Government.

20.44a - Albuquerque Service Center, Director of Budget and Finance

It is the responsibility of the Director, Albuquerque Service Center, Budget and Finance (ASC-
B&F), to:

         1. Implement and evaluate financial control systems for administrative, program, and
         operational activities to provide reasonable assurance for those obligations.

         2. Plan and direct all aspects of payment activities through subordinate supervisors.

         3. Establish and maintain adequate controls for all funds under their jurisdictions.

         4. Collect deferred maintenance data; ensure format is correct for reporting and prepare
         the information for the Financial Statements.
WO AMENDMENT 6509.19-2011-1                                                     6509.19_20
EFFECTIVE DATE: 02/03/2011                                                      Page 8 of 69
DURATION: This amendment is effective until superseded or removed.

                      FSH 6509.19 - ASSET FINANCIAL MANAGEMENT HANDBOOK
                                    CHAPTER 20 - REAL PROPERTY


20.44b - Albuquerque Service Center, Branch Chief of the Property and Working
Capital Branch

It is the responsibility of the Albuquerque Service Center (ASC-B&F), Branch Chief of the
Property and Working Capital Branch or equivalent to:

         1. Verify that funds are appropriately used for the acquisition and maintenance of real
         property assets based on requests submitted from the field to establish job codes and
         approved by both the Budget Officer and the Real Property Specialist.

         2. Establish in Financial Foundation Information System (FFIS) the real property job
         codes with the proper accounting data to capture the capitalized costs correctly based on
         coordination with other staffs.

         3. Forward requests for real property job codes to the real property accounting steward
         (RPAS) to ensure correct job codes.

         4. Review copies of all real property contract payments and pertinent portions of the
         contract (for example, schedule of bid items, award, other cost information, and so forth).
         Purchase orders must be provided to the RPAS for the asset file.

         5. In coordination with the contracting officer review, modifications to contracts to
         ensure proper funding for real property.

         6. Record capital leases in the general ledger in accordance with Agency and Federal
         accounting standards.

         7. Coordinate with Acquisition Management (AQM), Engineering, Recreation, or other
         Forest Service staffs to review acquisition actions to determine proper capitalization or
         expense treatment.

         8. Review all requests for property job codes in a timely manner so that the procurement
         can be processed.

         9. Ensure that the job code is appropriate for the project(s).

20.44c - Albuquerque Service Center, Real Property Accounting Team

The Real Property Accounting Team (ASC-B&F) is responsible for maintaining real property
financial data and audit support for current work in progress projects related to capitalized real
property. The Real Property Accounting Team has restrictive roles in Corporate Property
Automated Information System (CPAIS) for placing assets in service, making adjustments to
asset sub-ledgers, and performing write-offs and disposals.
WO AMENDMENT 6509.19-2011-1                                                      6509.19_20
EFFECTIVE DATE: 02/03/2011                                                       Page 9 of 69
DURATION: This amendment is effective until superseded or removed.

                      FSH 6509.19 - ASSET FINANCIAL MANAGEMENT HANDBOOK
                                    CHAPTER 20 - REAL PROPERTY


20.44d - Real Property Accounting Representative

Real Property Accounting Representative at ASC-B&F works for the Real Property Accounting
Team, part of the Property and Working Capital Fund (WCF) Branch. It is the responsibility of
the Real Property Accounting Representative to:

         1. Assist resource and acquisition staff in making decisions to capitalize or expense
         based on policy and business rules for capitalization and expense.

         2. Make capitalization determinations and send notice of determination to field units.

         3. Update CPAIS and Foundation Financial Information System (FFIS) for the
         capitalized asset related to the project.

         4. Establish real property job codes for capitalized assets in FFIS.

         5. Reconcile FFIS with CPAIS and monitor the accounting transactions against the work
         plan.

         6. Create and complete accounting adjustments for capitalized projects where needed, or
         take appropriate action to correct rejected transactions.

         7. Ensure that the values of asset write-offs are correct and updates in CPAIS have been
         completed.

20.45 - Regional Foresters, Station Directors, Area Director, International Institute
of Tropical Forestry Director, Forest Supervisors, Forest Products Lab Director,
and Job Corps Center Directors

Each regional forester, station director, Area Director, International Institute of Tropical Forestry
Director, forest supervisor, Forest Products Lab Director, and Job Corps Center director is
responsible for:

         1. Rendering technical advice and assistance to all levels of Forest Service, Albuquerque
         Service Center-B&F, region, station, Area, Institute, or Job Corps center in connection
         with accounting for General Property, Plant & Equipment (GPP&E).

         2. Ensuring the financial, acquisition, and other program staff work together in carrying
         out their respective duties to record timely and accurate GPP&E data in the Agency
         financial and property management systems, and facilitating Forest Service financial
         statement reporting.
WO AMENDMENT 6509.19-2011-1                                                       6509.19_20
EFFECTIVE DATE: 02/03/2011                                                        Page 10 of 69
DURATION: This amendment is effective until superseded or removed.

                      FSH 6509.19 - ASSET FINANCIAL MANAGEMENT HANDBOOK
                                    CHAPTER 20 - REAL PROPERTY



         3. Managing the acquisition, record keeping, documentation, control, inventory,
         safeguarding, protection, utilization, and disposal of GPP&E assets in the units they
         control.

         4. Gathering and retaining asset documentation. This task may be delegated to other
         responsible parties, such as the property supply technician (PST), real property
         management steward, Working Capital Fund (WCF) program manager, or WCF
         accounting staff.

         5. Ensuring procurement documents are prepared using the proper accounting code.
         This includes the correct Budget Object Class Code (BOC), fund code, and other
         accounting information to ensure accurate posting to the appropriate subsidiary property
         system.

         6. Certifying physical inventories to the Chief of the Forest Service.

         7. Ensuring timely, accurate, and complete recording and reporting of deferred
         maintenance data for each national forest, research station, and Area.

         8. Ensuring that condition surveys and inspection of the assets under management are
         conducted in accordance FSH 6509.11k, section 57.

         9. Informing ASC-B&F Real Property staff of all assets to be placed into service, to be
         expensed, and to be disposed of in the FY the action takes place at the field unit.

20.45a - Regional Infra Coordinator

The regional Infra coordinator (RIC) is responsible for providing guidance and direction to field
staff on the maintenance of real property data in the Infra Forest Service databases, which is
accessed through I-Web. The RIC may be a member of Engineering, Recreation, Range, Lands,
or other staff.

20.46 - Forests

20.46a - Engineering Staff Officer

It is the responsibility of the Engineering staff officer to:

         1. Create and maintain the real property assets (such as buildings, dams, water and
         wastewater systems, and travel routes) in the individual modules within the Forest Infra
         databases, with all mandatory and required attributes needed for internal and external
         reporting.
WO AMENDMENT 6509.19-2011-1                                                     6509.19_20
EFFECTIVE DATE: 02/03/2011                                                      Page 11 of 69
DURATION: This amendment is effective until superseded or removed.

                      FSH 6509.19 - ASSET FINANCIAL MANAGEMENT HANDBOOK
                                    CHAPTER 20 - REAL PROPERTY


         2. Design projects and assemble the contract package.

         3. Write a primary purpose statement for each capital improvement project and ensure
         that information is entered in the work plan description field and also on the FS-6300-4,
         Request for Contract Action.

         4. Coordinate with the unit budget officer and the contract officer representative (COR)
         to verify total award dollars.

         5. Coordinate with the Albuquerque Service Center (ASC-B&F) Property and Working
         Capital Branch to obtain the capitalized real property job code. The ASC-B&F Real
         Property Accounting Team shall complete FS-6500-244, Job Code Request Form for
         Capitalized Project, and a specific work plan before the job code may be provided. Work
         plans for capitalized real property projects must be at project and job code level, and
         include sufficient wording to show how the project meets capitalization criteria, total
         expected costs, and expected project completion date.

         6. Coordinate with the budget officer, the contract officer (CO) or COR, and the ASC-
         B&F Budget Office prior to submitting a contract modification, when adding monies or
         making changes to any of the job codes on the original contract document. Modification
         to contract must be processed when job codes have been changed. Distribution of the
         modification must be forwarded back to the originators and a copy sent to the ASC Real
         Property Staff.

         7. Complete condition assessment surveys for managed assets, including buildings,
         bridges, dams, roads, water and wastewater systems, and stewardship assets identified as
         managed assets.

20.46b - Lands Staff Officer

It is the responsibility of the Lands staff officer to:

         1. Provide the Real Property Accounting Representative at ASC-B&F with
         documentation supporting any land exchange, purchase, or donation where the land
         meets the definition of General Property, Plant, and Equipment (GPP&E) to be put in the
         asset folder.

         2. Establish and maintain the Land Area Reports and Smalltracts System (LARSTA), the
         official database for Forest Service-owned land acres.

         3. Compile the stewardship land data in LARSTA for inclusion in the financial
         statements.
WO AMENDMENT 6509.19-2011-1                                                        6509.19_20
EFFECTIVE DATE: 02/03/2011                                                         Page 12 of 69
DURATION: This amendment is effective until superseded or removed.

                      FSH 6509.19 - ASSET FINANCIAL MANAGEMENT HANDBOOK
                                    CHAPTER 20 - REAL PROPERTY


         4. Assist in the reconciliation of land acres between LARSTA and the General Service
         Administration (GSA) Federal Real Property Profile.

         5. Report additions/deletions to ASC FRR staff.

20.46c - Recreation Staff Officer

It is the responsibility of the Recreation staff officer to:

         1. Create and maintain real property assets within Infra (via I-Web) for all recreation site
         land units. The Recreation staff is also responsible for miscellaneous features within
         recreation sites that are not captured in individual Infra modules.

         2. Coordinate with the Engineering staff to ensure that real property assets for recreation
         constructed features, such as buildings, water systems, dams, travel routes, and so forth
         are created and populated within the individual modules within Infra.

         3. Write a primary purpose statement for each capital improvement project and input that
         information into the work plan description field and also on the request for contract
         action. Work plans for capitalized real property projects must be at project and job code
         level, and include sufficient wording to show how the project meets capitalization
         criteria, total expected costs, and expected project completion date.

         4. Coordinate with the ASC-B&F Property and Working Capital Branch to complete the
         form FS-6500-244, Job Code Request Form for Capitalized Project.

         5. Complete condition assessment surveys on recreation facilities and heritage assets for
         reporting in the financial statements.

20.46d - Contracting Officer/Purchasing Agent

It is the responsibility of the contracting officer/purchasing agent (CO/PA) to:

         1. Ensure that capitalized projects are captured with a real property job code or an
         expense job code, and the correct budget object code (BOC) is used on the contract and
         purchase order. This is done in collaboration with unit budget officer and ASC-B&F
         Property and Working Capital Branch staff.

         2. Coordinate with unit budget officer and PMO when a request for contract
         action/purchase order is received for real property assets.
WO AMENDMENT 6509.19-2011-1                                                       6509.19_20
EFFECTIVE DATE: 02/03/2011                                                        Page 13 of 69
DURATION: This amendment is effective until superseded or removed.

                      FSH 6509.19 - ASSET FINANCIAL MANAGEMENT HANDBOOK
                                    CHAPTER 20 - REAL PROPERTY



         3. Ensure that contracts include the schedule of bid items with job codes showing costs
         identified to the respective assets and not distributed on a percentage basis. Use of
         percentages is prohibited for acquisition of an accountable asset. Delineation of job code
         assigned to a specific asset must be clear.

         4. Ensure that modifications to contracts and purchase orders for real property
         capitalized assets are routed through the budget officer to verify fund availability.

         5. Provide a copy of the modifications to the ASC-B&F Property and Working Capital
         Branch.

         6. Provide ASC-B&F real property representative with a copy of purchase orders
         pertaining to real property job codes.

         7. Coordinate with field lease experts and the ASC-B&F Real Property Accounting
         Team in lease capitalization analysis before a lease is executed due to the budgetary and
         accounting implications for recording capital leases. Capital leases must follow budget
         scoring requirements as defined in OMB Circular A-11, and FASB (Federal Accounting
         Standards Board) Statement No. 13.

20.46e - Contracting Officer Representative

It is the responsibility of the contracting officer representative (COR) to:

         1. Provide copies of pertinent portions of real property contracts to the ASC-B&F Real
         Property Accounting Team for the real property capitalized asset accounting file (for
         example, the Contract Award, Signature Page, Schedule of Bid Items, and Contract
         Modifications).

         2. Monitor the construction of the project and submit contract invoice payments to
         appropriate Acquisition Management (AQM) staff for processing payment.

         3. Review invoices from a contractor for payment to ensure that it adheres to the contract
         terms and conditions and contains all the required data required by the Payment Clause.

         4. Forward copy of contract invoices to ASC-B&F Real Property Accounting Team.

         5. Sign and submit the “acceptance form” upon completion of a project to ASC-B&F
         Real Property Accounting Team for the real property accounting file and to appropriate
         AQM staff for the contract payment file.

         6. Complete and sign the form FS-6500-246, Real Property Project Completion
         Certification, to ensure services have been performed, and all costs on the project are
         complete and accurate.
WO AMENDMENT 6509.19-2011-1                                                        6509.19_20
EFFECTIVE DATE: 02/03/2011                                                         Page 14 of 69
DURATION: This amendment is effective until superseded or removed.

                      FSH 6509.19 - ASSET FINANCIAL MANAGEMENT HANDBOOK
                                    CHAPTER 20 - REAL PROPERTY


         7. Notify the ASC-B&F Real Property Accounting Team that the asset has been placed
         in service so accounting records can be for the current fiscal year for in service projects.

         8. Coordinate with the unit budget officer, Engineering, and ASC-B&F Real Property
         Accounting Team to add funding or make change to any of the job codes on the original
         contract prior to submitting a modification on a contract.

20.46f - Infra Data Steward

It is the responsibility of the Infra data stewards to create and maintain asset data in the forest
Infra system, which is accessed through I-Web. The Infra data steward may be a member of
Engineering, Recreation, Range, Lands, or other staff.

20.5 - Definitions

General definitions that are common to both real and personal property are found in section 05 of
this handbook. The following definitions include the financial aspect of financial management.

         Addition. An extension to an existing constructed feature, such as adding a room to a
         dwelling. A real property project may be capitalized if the addition increases the capacity
         of an asset or changes the functionality of the asset.

         Base Unit. A term used to describe the lowest classification or category of an asset for
         accounting purposes. A capitalized base unit is assigned a unique asset identifier (UAI)
         and is recorded separately in the real property sub-ledgers. A base unit may not be
         broken down further into lower components or aggregated with other components for
         recording purposes. Once the base unit for a property item is properly determined, it
         must not be changed. Real property policies, procedures, and thresholds may be applied
         against the base unit property items to determine the proper classification of all financial
         transactions (such as, capitalize vs. expense and maintenance vs. improvement). The
         base unit for a real property item may be as large as an entire site, or as small as an
         individual structure. There are two types of units to be identified.

              a. Individual Asset - A structure or asset identified as a single unit. Includes features
              such as buildings, utility systems, road bridges, and land units such as campgrounds,
              picnic areas, district compounds, and Job Corps centers.

              b. Pooled Asset - Linear construction features, such as roads.

         Building. A structure to support, shelter, or enclose persons, animals, or property of any
         kind. It includes the structure and all of the integral components that solely support the
         functionality of the building (such as septic tanks, entrances, carports, and so forth.)
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         Capacity. A measure of the size of an asset. The unit of measure for capacity depends on
         the type and function of an asset. Some examples of how capacity is measured are square
         footage, acres, maximum occupancy, and recreation users. Many assets will have more
         than one measure of capacity. For example, a building could be measured in square
         footage as well as occupancy.

         Concentrated Use Area (CUA). An undeveloped site or area where management time or
         dollars is invested because recreation use in the location leaves evident impacts, such as
         litter; vandalism; or soil compaction such as dispersed campsite, or as large as a climbing
         area, or as complex as an all terrain vehicle hill climb area.

         Constructed Feature. A general term used to identify a specific asset, such as a road,
         trail, building, utility system, communications tower, campground, or dam. Not all
         constructed features are capitalized.

         Construction. The original creation of a real property asset through assembling, building,
         fabrication, or installation of facilities or sites.

         Decommission. Demolition, dismantling, removal, obliteration, or disposal of a
         deteriorated or otherwise unneeded asset, including necessary cleanup work. This action
         eliminates the deferred maintenance needs for the fixed asset. Portions of any asset or
         component may remain if they do not cause problems or require maintenance.

         Deferred Maintenance. Maintenance that was not performed when it should have been,
         or when it was scheduled, and was, therefore, put off or delayed for a future period. The
         value of deferred maintenance is used as a supplemental disclosure in the Forest
         Service’s annual financial statements. The amount is calculated using condition surveys
         and by estimating the amount that would bring the applicable asset to the condition which
         will ensure the asset achieves its expected life. Compliance with safety codes such as life
         safety, Americans with Disabilities Act, Occupational Safety and Health Administration,
         environmental, and so forth, and other regulatory or Executive order compliance
         requirements not met on schedule, is also considered deferred maintenance. Deferred
         maintenance is an estimate assessed by program staffs for reporting purposes and is not
         entered into the accounting records. The ASC-B&F Real Property accountants do not,
         generally, have responsibilities associated with deferred maintenance.

         Depreciation. The rational and systematic method of allocating the cost of an asset over
         its estimated useful life.

         Depreciation Start Date. The date placed in service or June 30th of the year the capital
         project (constructed, donated, or transferred-in) is complete as verified by the signature of
         the project manager and the property management officer. The ASC-B&F Real Property
         accountant shall wait 3 months after the asset is completed before placing the asset into
         service in CPAIS, to ensure all accounting transactions have been posted in CPAIS.
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         Developed Site. A distinct place containing a concentration of facilities and services
         evidencing a significant investment in facilities and management. Developed sites
         include:

              1. Administrative Site. A contiguous distinct area on which a group of
              administrative facilities are located and include headquarters, ranger stations,
              residential compounds, work centers, and other similar sites used in conducting
              Forest Service business.

              2. Recreation Site. A concentration of contiguous facilities and services used to
              provide recreation opportunities to the public, such as campground, picnic ground,
              trailhead, scenic overlook parking lot, and so forth.

              3. Communication Site. A collection of features for radio communication systems
              and includes poles, buildings or structures to house radio equipment, towers, radio
              antennas, crossbars, wire, microwave and satellite dishes, and fences and access
              roads.

         Documentation Retention. All documentation files for real property must be retained for
         10 years after the year of disposal (FSH 6209.11, Records Management Handbook).

         Facility. A single or contiguous group of improvements that exists to shelter or support
         Forest Service programs. This term may be used in either a broad or narrow context: a
         facility may be a site (collection of constructed features) or a single constructed feature.

         Federal Real Property Profile (FRPP). A report required by the General Services
         Administration (GSA) for all real property owned and leased by the Forest Service
         (formerly known as the GSA 1166 Report).

         Force Account Authorization. This is used within the Infrastructure system for formal
         documents to acquire, remove, modify, or maintain a constructed feature or land using
         Forest Service personnel, equipment, and materials.

         General Forest Area (GFA). All lands available for recreation use that are outside of
         wilderness, developed, and administrative sites.
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         Heritage Assets. Assets that have historical, educational, or architectural significance and
         are held in trust for future generations. These assets are rarely used in the Agency’s daily
         operations; therefore, these assets should generally not be capitalized when acquired or
         renovated, but should be expensed. If a heritage asset is used primarily for Forest Service
         operations (such as a district office), the heritage asset is known as a “multi-use heritage”
         asset, and the real property project for the asset is considered for capitalization.

         Improvement. An action that enlarges or improves capacity or increases the useful life of
         an existing real property asset.

         Individual Asset. A structure or asset identified as a single unit. Includes features such
         as buildings, utility systems, road bridges, and land units such as campgrounds, picnic
         areas, district compounds, and Job Corps centers.

         Infra Unit. Interchangeable with definition for the term constructed features. An Infra
         unit may or may not be capitalized.

         In-Service Date. The date a project was completed and accepted by the Forest Service,
         and all costs have been recorded in CPAIS. The ASC-B&F Real Property Accountant
         shall allow 3 months to elapse once the capitalized project is complete (as evidenced by
         the signature and date provided by the project manager and property management officer)
         before placing the asset in service in CPAIS, to ensure all accounting transactions have
         been posted in CPAIS.

         Land Rights. Land rights are interest and privileges held in land owned by others, such
         as leaseholds, easements, water rights, diversion rights, submissions rights, rights-of-way,
         and other like interests in land.

         Leasehold Improvement. This includes term easements, rights-of-way, Forest Service
         improvements on leased land, and Forest Service improvements to leased facilities.

         Maintenance. Maintenance is the act of keeping real property assets in an acceptable
         condition. Maintenance includes preventive maintenance, normal repairs, replacement of
         parts and structural components, and other activities needed to preserve an asset so that it
         continues to provide acceptable service and achieves its expected life. Maintenance
         includes changes made to comply with laws, regulations, codes, or other legal
         requirements, such as the Americans with Disabilities Act (ADA), as long as the original
         intent or purpose of the asset, capacity, or useful life are not changed. Regardless of the
         cost, maintenance is not capitalized.
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         Multi-use Heritage Assets. In cases where a heritage asset serves two purposes, a
         heritage function and general government operations, the heritage asset should be
         considered a multi-use heritage asset if the predominant use of the asset is in general
         government operations.

         National Environmental Policy Act (NEPA) Studies. Environmental impact studies
         required to be completed prior to final approval of real property construction projects to
         comply with the National Environmental Policy Act of 1969.

         Pooled Asset. Road prism and road surface assets, where costs are collected in annual
         cost pools and placed into service automatically in the CPAIS system at fiscal year end.

         Project. A specific asset acquisition or construction plan or design that may be grouped
         into different phases over 1 or more years. Each phase may complete a part of the asset
         where the intended purpose of that asset may be accomplished even though other phases
         of that project may need to be completed. For real property accounting purposes, a
         project consists of making real property improvements (as opposed to maintenance) to a
         single property asset. Once the project is completed, the improvement is placed in
         service.

         Public Domain Land. Land that has never left Federal ownership. Public domain land is
         not capitalized and, therefore, has no dollar value in the general ledger.

         Purchaser Credit Assets. A constructed feature that is created or constructed by a
         contractor or cooperator in return for a reduced fee that would normally be required for
         the goods or services being provided. The most common is timber purchaser road credits
         and specified road credits. Purchaser Credit application has not been applied to timber
         contracts since 1999.

         Real Property. Real property is any interest of the United States in land, buildings, or
         structures, including any permanently attached fixtures, appurtenances, and
         improvements of any kind located thereon.

              1. Land which is acquired by purchase, donation, exchange, or other method of
              acquisition. Land has an unlimited life and is not depreciated.

              2. A constructed feature that is attached to land or part of the fixed object, maintains
              its physical existence for its lifetime, has a useful life of 2 or more years, and is not
              defined as personal property. A constructed feature has a limited life and is
              depreciated over its useful life if it meets capitalization criteria.
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              The costs of prefabricated structures, such as Butler-type storage warehouses,
              modular units, house-trailers (with or without undercarriages), quonset huts, and
              Army bridges are real property if the intent is a permanent structure. In those
              instances where the structure’s intent and functional use at the time of acquisition, is
              as a mobile unit requiring the ability to "pull up and move" (such as a house-trailer
              used by a survey crew which is moved periodically to a new location), the asset is
              considered personal property.

              3. A developed site, such as a campground or engineering compound, is a land unit
              administered as a single entity.

              4. Any reconstruction or addition to the items listed in paragraphs 2 and 3 above.

              5. Related personal property may be capitalized as real property, although the
              property may only be considered as one or the other. Related personal property is any
              personal property that, at the time of construction, becomes an integral part of real
              property or related to, designed for, or specifically adapted to the function or
              productive capacity of the real property. Removal of this personal property would
              significantly diminish the economic value of the real property.

         Reconstruction. Work that is performed on an existing asset whereby the asset is either
         restored or renovated to a condition that allows it to continue to perform its current
         function. The cost of this work is expensed. If the work upgrades all or a part of the
         asset to a higher standard (increases capacity, changes design function, or extends its
         useful life and is not maintenance) the costs may be capitalized.

         Rehabilitation. Renovation or restoration of an existing fixed asset or any of its
         components to restore the functionality or life of the asset. Because there is no expansion
         or change of function, the work primarily addresses deferred maintenance and is not
         capitalized.

         Remodeling. The alteration, replacement, or modification of an asset in a way that
         changes its size, function, purpose, or use. These costs may be capitalized if they meet
         capitalization criteria.

         Renovation. The alteration, replacement, or modification of an asset's elements or
         components that upgrades or refurbishes them without changing the asset's function or
         size. These costs are not capitalized.

         Specified Road Credits/Purchaser Road Credits. Road values generated under the timber
         sale contracts that provide for a purchaser allowance for construction or reconstruction of
         the specified system roads identified on the forest transportation plan. Purchaser road
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         credits were discontinued in April 1999, but still remain in existing timber sale contracts
         that began prior to April 1999. Specified road credits are now included in the timber
         appraisal process and recorded in the Automated Timber Sale Accounting system.

         Stewardship Assets. Real property assets that do not meet the definition of General
         Property, Plant, and Equipment (GPP&E) or heritage assets, and are designed,
         constructed, and managed to protect the forest environment, are considered stewardship
         assets. Forest Service holds stewardship land in trust for future generations and
         constructs assets to protect the habitat of animals, fish, and fauna that live on the land;
         manage stewardship lands to keep sediment in place to prevent pollution of lakes or
         rivers; provide flood control; and other purposes not for use in daily Agency operations.
         These costs are expensed. Assets in the following functional categories are examples of
         stewardship assets: Recreation trails and trail bridges, wilderness trails and trail bridges,
         wildlife habitat improvements, threatened and endangered species (TES) improvements,
         rangeland management improvements and fences, fish habitat improvements, watershed
         improvements, and landing fields.

         Stewardship Land. Defined by the Federal Accounting Standards Advisory Board
         (FASAB) as land and land rights owned by the Federal Government and not acquired for
         or in connection with other General Property, Plant, and Equipment (GPP&E). Land in
         the public domain and national forest land must be excluded from GPP&E and referred to
         as stewardship land. Examples include land used for forests, grazing, parks, and wildlife.
         Stewardship land may be acquired through purchase, exchange, or smalltracts obtained
         for general purposes such as the National Grasslands, established by the Bankhead Jones
         Act.

         Structural Improvement. An improvement, which may be an addition or a reconstruction,
         must either extend the life of the existing asset beyond its remaining life and is not
         maintenance, enlarge the capacity of the asset, or change the functionality of the asset,
         and cost $25,000 or more to be capitalized. Improvement occurs when the original
         design function of the asset has been significantly upgraded. A structural improvement to
         an existing asset must meet capitalization criteria and capitalization threshold before
         being capitalized.

         Third Party Agreement. Formal agreements used to manage the acquisition, removal, or
         modification of land or constructed features by non-Forest Service persons or
         organizations. Third party agreements may result from volunteer agreements, purchaser
         credit contracts, range permits, building construction contracts, or land purchase
         agreements.
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         Transfers. The non-reciprocal transfers of assets (or portions of assets) or services
         between Federal entities and the Forest Service, including transfers between Forest
         Service units. Such assets are separate from those for which the Forest Service has
         acquisition costs.

         Unique Asset Identifier (UAI). The unique number assigned to each capitalized base unit
         asset to link FFIS accounting transactions to the appropriate CPAIS asset sub-ledgers.
         This number is assigned when creating the sub-ledger in the CPAIS application. The
         number assigned in the sub-ledger must be in the UAI field in Miscellaneous Job Code
         Table (MJOB) when the job code is created. This ensures that the capitalized costs
         charged to the job code are posted to the correct sub-ledger in CPAIS. Note: The Capital
         Project Number (CPN) is no longer used for real property.

         Valuation. Process of establishing the fair market value of an asset to determine if it
         meets capitalization rules.

         Value Stream. A sub-ledger account will have one or more value streams. Each value
         stream contains a summary of the capital transactions by treasury symbol and general
         ledger account that were received from FFIS, and passed the CPAIS accounting edits.
         After the capital activity is completed and placed in service, depreciation begins and
         continues until the asset is completely depreciated.

         Work-in-Progress. Construction projects that begun but remains incomplete. The asset's
         costs are accrued in their entirety until the constructed feature is complete and usable.
         Upon completion, the asset is put into service, the total cost is moved from the work-in-
         progress asset account, and depreciation of the asset begins.

         Work-in-Progress Adjustment. Upon completion of the project, as an asset is put into
         service, CPAIS generates adjusting transactions where the total capitalized cost is moved
         from the work-in-progress account to the appropriate general ledger account.
         Depreciation of the asset begins June 30th of the fiscal year that the asset is placed in
         service.

         Write-off. The process by which an asset sub-ledger’s capitalized and accumulated
         depreciation values are removed from CPAIS upon asset disposal.

20.6 - Project Groups

The 2-digit project group code is used in the CPAIS system and Forest Service accounting
system to categorize real property assets and to identify costs for capitalized assets. The project
group is entered in the project group field of the job code.
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Depreciation is based on the useful life assigned to a project group. If an asset serves more than
one purpose, choose the project group number that identifies the primary purpose of the asset.
See exhibit 01.

         Project Group 01, Office Buildings. Buildings used as offices, such as ranger district or
         supervisor office buildings, research project offices, zone engineering offices, and special
         project offices.

         Project Group 02, Housing. Buildings used to lodge individuals, such as compound
         residences, headquarters dwellings, bunkhouses, dormitory, barracks, or other quarters.
         Garages attached to housing should be included as part of the house.

         Project Group 03, Storage Buildings. Buildings used to store items for their protection or
         preservation for subsequent use. Project Group 03 includes such buildings as
         warehouses, storage sheds, garages for storage of vehicles or other equipment (when the
         garage is not attached to a dwelling), cold-storage sheds for nursery stock, cone-storage
         buildings, oil houses, and dynamite cache buildings.

         Project Group 04, Service Buildings. Buildings that support service activities, such as
         motor-vehicle repair shops, nursery seed-extraction buildings, and mess halls.

         Project Group 05, Research and Development Buildings. Buildings that support research
         and development efforts, such as green houses, laboratories, and special project buildings
         being used to develop new technologies.

         Project Group 06, Recreation Buildings. Buildings used for recreation activities, such as
         warming huts, pavilions, recreation cabins, and visitor centers and are the primary
         attraction at the developed recreation site. Buildings that are an integral part of the
         recreation site are capitalized as a site cost. These assets are generally stewardship if the
         asset is not located within a developed recreation site and the asset does not generate
         enough revenue to pay the majority of maintenance and other annual costs.

         Project Group 07, Other Types of Buildings. Buildings not codified elsewhere, such as
         lookout towers, woodsheds, animal shelters, non-recreation warming huts, radio
         communication buildings, administrative cabins, barns, and any other type of building not
         coded under Project Group 01 through 06 or 30. These assets qualify as stewardship if
         not located on a developed site.

         Project Group 08, Multi-Site Utility Systems. Heating, cooling, power, sewage, water,
         and electrical systems owned by the Government which are separate and distinct systems
         that service more than one developed site. Costs of utility systems that provide service to
         only one site or only one building are included in the cost of that site or building.
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         Project Group 09, Communication Sites. Constructed features for communication
         systems such as radio and telephone towers, which are separate and distinct systems that
         service more than one developed site, site protection fences, and access roads not on the
         transportation system. Project Group 09 also includes constructed features, such as poles,
         crossbars and wire, microwave towers, and satellite dishes which are integral parts of the
         system and are necessary to place the asset into service. Costs of communication systems
         that provide service to only one site or only one building are included in the cost of that
         site or building. Buildings used primarily to house communications must be coded to
         Project Group 07, Other Types of Buildings.

         Project Group 10, Developed Administrative Sites. Construction, reconstruction, and
         additions of assets on developed administrative sites, such as a district compound, work
         center, or science lab. Once a project is determined to meet capitalization criteria for the
         administrative site, the capitalization of the project work includes all integral parts of the
         developed site, such as parking lots, fences, gates, trailer pads, paving (if not part of road
         system), landscaping, flagpoles, barriers, parking spurs, signs, single-site utility systems,
         communication systems, fuel tanks, and other structures (not defined as base units) that
         are part of the planned project and are necessary to place the asset in service. It excludes
         the capitalized value of buildings, land, and road components charged to Project Groups
         01 through 07, 11, 12, and 22 through 24.

         Project Group 11, Leasehold Improvements. Construction, reconstruction, and additions
         on assets which the Forest Service does not own and has a limited time of occupancy, but
         is permitted to make additions due to the length or conditions of a formal lease, permit,
         easement, or right-of-way. Capitalized leasehold improvements are discouraged because
         improvements should be handled either outside the terms of the lease or included as
         requirements in the lease agreement package. If capitalized, include the cost of
         purchasing the easement or permit if required for the capitalized project, as well as the
         actual upgrading of the asset where law, or the terms or length of the lease or easement,
         prevents entitlement. [Note: Easements are not capitalized separately if they are on
         stewardship land and are needed for the care of the stewardship assets.]

         Charge entitled GPP&E assets constructed by Forest Service on leased land to the
         appropriate project group number. Example: construction of research building to which
         the Forest Service hold legal title, built on university land is charged to project group 5.

         Project Group 12, GPP&E Land and Land Rights. The acquisition cost of land acquired
         with or for a developed site, such as an administrative or recreation site, is capitalized
         when the cost of the land may be identified. These costs include the price of the land,
         associated land rights, and other costs related to the passage of title, such as search and
         guaranty of title, notary and recording fees, land surveys of the property being acquired,
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         accrued tax liabilities, consents, damages, demolition of existing assets on the acquired
         site, and expenses associated with the benefits provided to displaced persons under the
         Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (FSM
         5420.14b).

         Project Group 22, Road Surface Construction. All surface located items for construction
         or reconstruction of a road surface. Capitalized costs include construction staking,
         developing and placing aggregate base, surfacing, initial dust palliative treatment,
         ditches, dikes, guardrail, markers, signs, road closure devices, and other similar items as
         part of building a road, if these items are necessary to complete the capitalized project
         and place the asset in service. This project group is a pooled asset in CPAIS.

         Project Group 24, Road Bridges Construction. All direct expenditures for the
         engineering, construction, or reconstruction of bridges. Project Group 24 includes the
         staking of structures, structure excavation, construction, rip rap and other related
         activities, and structure removal, when necessary to place the capitalized asset into
         service. This project group is an individual asset in CPAIS. (NOTE: Assets defined in
         Project Groups 22 through 24 include only those roads and bridges in the forest
         transportation system.)

         Project Group 26, Dams. Engineering, construction, and reconstruction of major water
         and sediment holding facilities made of soil, concrete, or other materials. Dams may be
         considered to be GPP&E if the primary purpose of the dam is Forest Service operations
         or if the dam generates its own revenue. Such dams are located on administrative sites.
         Frequently, dams are considered stewardship because their primary purpose is to protect
         the environment or its natural resources. Such dams are not located on an administrative
         site. Stewardship costs are expensed. If dams are capitalized as GPP&E, they have a
         useful life of 50 years and are owned by the Forest Service. Dams constructed by Special
         Use Permittees will be recorded as real property only after title passes to the Forest
         Service when the permit expires, and Forest Service has determined that the dam will not
         be abandoned. Dams turned over to the Forest Service as the result of an expired permit
         are recorded as an asset only if there is a current useful Forest Service mission purpose
         for the dam.

         Project Group 30, Developed Recreation Sites. Engineering, construction, or
         reconstruction of assets included on a developed recreation site, such as campgrounds,
         picnic areas, organization camps, and resorts. This code encompasses all integral
         components, including buildings that are located within the developed site, stoves,
         fireplaces, tables, barriers, parking spurs, bathhouse, toilets, boat launch, pavilion, utility
         system, and other related structures when such integral components are necessary to
         complete the project and place the asset into service. Any interior roads which are part of
         the transportation system are excluded. For reconstruction, the capitalization
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         determination must be based on whether the work meets capitalization criteria for the site
         itself (Project Group 30); not the integral components of the site. Project Group 30
         excludes any building on the site that generates its own revenue and is capitalized
         separately, such as a visitor center. Such buildings should be capitalized individually to
         Project Group 06 if they meet capitalization criteria. Any GPP&E land specifically
         acquired for the recreation site is capitalized to Project Group 12.

         Project Group 31, Recreation General Forest Areas (GFAs). Engineering, construction,
         or reconstruction of assets that occur within the general forest area, as defined in Infra,
         which have minimal development; such as along roads, streams, lakes, oceans, and trails.
         Asset types would include garbage pits, water impoundments, barriers, signs, unloading
         ramps, and other structures. An asset is not capitalized if its primary function is to
         protect the environment and its natural resources.

         Project Group 71, Timber Resource Improvements. Engineering, construction, or
         reconstruction of structural assets which are primarily for the timber resource, such as
         fences for protection, and access roads to a genetic tree orchard not capitalized under
         Project Groups 22 through 24, as part of the permanent transportation system.

         Project Group 75, Fire Control Improvements. Engineering, construction, or
         reconstruction of structural assets which enhance or support fire control measures, such
         as concrete or metal aprons constructed to catch and transport rain, cisterns, storage
         tanks, holding ponds, wells, and pumping stations. Assets that were initially constructed
         primarily for other purposes, but that also benefit fire control efforts, such as a dam, must
         be coded to the appropriate project group number, other than fire control. Fire control
         improvements also include fences and access roads that are constructed for fire control
         purposes but are not part of the permanent transportation system under Project Groups 22
         through 24. This project group is qualified as a stewardship asset if placed in a general
         forest area (GFA).

         In fiscal year 2002, Forest Service redefined minor culverts (recorded in Project Group
         23) and major culverts (recorded in Project Group 24) to be included in the road prisms.
         Historical culvert costs recorded in these project groups will remain until removed
         through road decommissioning.
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                                                 20.6 - Exhibit 01

                           Crosswalk of Project Groups, Cost Organizations,
                              Standard General Ledger (SGL) Accounts

Note: Use of project group numbers is subject to capitalization policy. If the asset is not
capitalized (such as stewardship assets), the general ledger account for projects related to the
asset must be an expense general ledger account rather than those accounts listed below.

  Project                             Title                          Cost Org     Useful         SGL
  Group                                                                            Life         Account
                                                                      RP (Cap
     01         Office Buildings                                     Real Prop)    30             1730
     02         Housing                                                 RP         30             1730
     03         Storage Buildings                                       RP         30             1730
     04         Service Buildings                                       RP         30             1730
     05         Research and Development Buildings                      RP         30             1730
     06         Recreation Buildings                                    RP         30             1730
     07         Other Types of Buildings                                RP         30             1730
     08         Multi-Site Utility Systems                              RP         15             1740
     09         Communication Sites                                     RP         20             1740
     10         Developed Administrative Sites                          RP         20             1740
     11         Leasehold Improvements                                  RP         10             1820
     12         GPP&E Land and Land Rights                              RP         N/A            1711
     22         Road Surface Construction                               RP         10             1712
     24         Road Bridges Construction                               RP         50             1740
     26         Dams                                                    RP         50             1740
     30         Developed Recreation Sites                              RP         20             1740
     31         Recreation General Forest Areas                         RP         20             1740
     71         Timber Resource Improvements                            RP         20             1740
     75         Fire Control Improvements                               RP         20             1740

The Cost Org RP = Capitalized Real Property.
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20.7 - Acronyms

         ASC-B&F. Albuquerque Service Center, Budget and Finance.

         ATSA. Automated Timber sale Accounting.

         CIP. Capital Improvement Plan.

         COR. Contracting Officer Representative.

         CPAIS. Corporate Property Automated Information System.

         CPN. Capital Project Number.

         EMIS. Equipment Management Information System.

         FFIS. Financial Foundation Information System.

         FOR. Fixed ownership Rate.

         FRPP. Federal Real Property Profile.

         GFA. General Forest Area.

         GL. General Ledger.

         GPP&E. General Property, Plant, and Equipment.

         IAS. Integrated Acquisition System.

         Infra. Infrastructure.

         LARSTA. Land Area Reports and Smalltracts System.

         MJOB. Miscellaneous Job Code Table.

         NEPA. National Environmental Policy Act.

         PCMS. Purchase Card Management System.

         PAT. Property Management Technician.

         PM. Property Manager.

         PMO. Property Management Officer.
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         RPA. Real Property Accounting.

         RPAS. Real Property Accounting Steward.

         RPM. Peal Property Management.

         RPMO. Real Property Management Officer.

         TROB. Transaction Registers for Obligations.

         UAI. Unique Asset Identifier.

         WCF. Working Capital Fund.

         WIP. Work-in-Progress.

21 - SYSTEMS

Forest Service employees are required to use only Forest Service or Department financial
management and related mixed-use systems. These corporate financial applications must not be
customized without written approval and coordination of the Washington Office, Director, and
Financial Management Systems. See FSM 6520.

21.1 - Infra

Infra is an integrated asset management database application with more than 20 separate modules
and is designed to house inventories of all data elements for the management and control of real
property, such as developed recreation sites, general forest areas, administrative sites,
constructed features, roads, trails, and so forth. All real property under Forest Service control is
recorded in Infra, which is accessed through I-Web.

21.2 - I-Web

I-Web is the point of entry for updating assets in Infra. I-Web application is a Web-enabled
application and functions as a launching pad for a variety of national applications. I-Web
includes all the Infra applications such as Range, Bridges, Roads, Wilderness, and so forth.

21.3 - Corporate Property Automated Information System (CPAIS)

The Corporate Property Automated Information System (CPAIS) is a platform independent,
Web-enabled real property management system based upon the Forest Service government-off-
the-shelf (GOTS) Infrastructure (Infra) system. CPAIS contains a subsidiary ledger to the
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corporate financial system and interfaces with FFIS. The CPAIS application is hosted at the
National Information Technology Center (NITC) and end-users access the system via a Web
browser. The CPAIS replaced Infra Central as the real property accounting module. The CPAIS
Web application has two subsystems:

         1. Real Property Management (RPM): The CPAIS Real Property Management module
         design supports FRPP, Capital Investment, reporting requirements. The module provides
         consistent data to enable an accurate inventory of the Department’s real property assets
         and supports the full life cycle of Real Property Management.

         2. Real Property Accounting (RPA): The CPAIS Real Property Accounting module
         provides the functionality to establish sub-ledgers for capitalized assets and accumulate
         associated accounting transactions. Transactions are captured and summarized for each
         project related to an asset by fiscal year and accounting line. A sub-ledger may reflect
         numerous projects over a period of several years for the same asset, but each asset only
         has one sub-ledger. The RPA module allows tracking of work-in-progress (WIP)
         projects; capitalization; and depreciation of real property assets. Accounting transactions
         resulting from placing assets in service and asset disposal originate in CPAIS and are sent
         to FFIS for general ledger update.

         The main users of this subsystem are financial managers, real property specialists, and
         accountants. The RPA module provides accounting information in the CPAIS
         subsystem, interfaces with the FFIS corporate financial system, and provides financial
         reporting for the Department and its agencies. The RPA module of CPAIS has the
         functionality to manage work-in-progress capitalized projects, including sub-ledger
         creation and summary of capitalized values; maintain asset capitalized project status;
         show project completion; and begin depreciation, calculate depreciation, and write off
         value of assets when disposed.

              a. Interface to FFIS. CPAIS calculates depreciation and prepares depreciation
              transactions each month for all assets that are in service and not fully depreciated.
              Additionally, CPAIS creates transactions for asset value write-offs as a result of asset
              disposal. These transactions are sent to FFIS through an automated interface process
              around the 26th of each month.

              b. Interface from FFIS. Transactions in FFIS that are recorded to a real property
              general ledger account are selected during the monthly interface from FFIS. The
              FFIS-to-CPAIS interface process occurs around the 5th of the month following the
              monthly close of FFIS.
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21.4 - Land Areas Report and Smalltracts System

The Land Areas Report and Smalltracts System (LARSTA) is the official database for Forest
Service-owned stewardship land acres. LARSTA is maintained by the Lands program staff.
Although all land is included in the database, when land is set aside for GPP&E use (such as for
an administrative site or developed recreation site), a notation is made to show the land is no
longer available as stewardship land.

21.5 - Automated Timber Sale Accounting System

The Automated Timber Sale Accounting (ATSA) system is a centralized servicewide system
shared by all Forests. Timber sale contract information from each national forest is stored and
maintained in this national data base. The information for all forests is processed in the same
manner at the same time.

21.6 - Work Plan System

The work plan system supports field requirements to plan and manage project work at the
program and project level. A work plan, at the job code level, is required for all real property
capitalized projects.

22 - REAL PROPERTY ACCOUNTING

22.1 - Asset Valuation – Methodologies

         1. Actual Costs. As of October 1, 1994, the only accepted method for valuing real
         property assets recorded in the accounting system is actual cost accumulation (see
         sec. 22.26). Where a single contract may apply to multiple assets, actual costs must be
         identified for each asset. Percentage distribution of cost is not acceptable unless all assets
         and cost for each are identical. Section 22.29, provides examples of the types of
         documents that are required to support the actual cost of the asset.

         2. Appraised Costs. Where capitalization criteria is met and actual cost documentation is
         not available because acquisition transactions did not flow through the FFIS accounting
         system, capitalize new constructed features, reconstruction, or additions made to existing
         constructed features at their fair market value. An example of the use of appraised costs
         is when an asset is donated by a non-Federal entity, or when an asset is transferred from
         another Government agency and the agency has no (or insufficient) documentation to
         support the acquisition value. Include any actual costs incurred by Forest Service to
         place the asset in use. See sections 23.4, and 23.5, for specific guidance on the method to
         use for the different types of donations or transfers. Use form FS-6500-222, Asset
         Valuation Documentation, to document the capitalized value and place it in the asset file.
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         3. Historical Valuation. Prior to October 1, 1994, the Forest Service used several
         methodologies to value real property assets because actual cost documentation was not
         always available.

              a. Actual Historical Cost. When available, the cost of real property must be based on
              documented, historical cost. Documentation to support asset value is maintained in
              the real property capitalized accounting folders, which or when the project is
              complete and placed into service are sent to field units to be filed with the asset
              management record.

              b. Auditor Accepted Value. The Forest Service documented the capitalized value of
              existing assets in historical accounting records, utilizing reports available prior to the
              implementation of FFIS. These records included FS-6500-53, Real Property Ledger;
              Budget report of Real Property (a product of the Central Accounting System prior to
              FFIS); Unit Financial Statement; or the Statement of Obligations. This type of
              documentation is maintained in the real property asset folders and is accepted in audit
              for support of capitalized values for individual assets constructed prior to 2002.

              c. Estimation or Appraisal. In those instances where an acceptable record of the
              asset value does not exist because the asset was donated or transferred, an estimation
              or appraisal procedure is used. The methodology used is documented and the
              individuals who determined the asset value are named. This documentation is
              maintained in the real property asset folders.

         4. September 30, 2001, Recorded Audit Adjustment. The FY 2001 auditors performed a
         controlled audit test methodology that statistically sampled Forest Service individual
         assets and projected a value for these assets. Forest Service recorded an adjustment in the
         Infra Central System (now CPAIS) on September 30, 2001, to adjust the value of
         individual assets to the projected value. Because of this adjustment, the Forest Service
         has restrictions on adjustments made to real property capitalized values.

              a. For additions of real property individual assets that existed as of September 30,
              2001, but are not recorded in CPAIS, submit an adjustment request to the Property
              and Working Capital Branch, Real Property Team at ASC-B&F. The Real Property
              Accounting Team shall facilitate creating a new sub-ledger and recording a cap value
              of $1, unless otherwise directed by management. Adding values to existing sub-
              ledgers for prior years is not encouraged, because of the impact of prior year
              adjustments to preceding financial statements and audits. Such actions must be
              approved by management after examining the total impact of the accumulation of all
              requests for prior years. Note: The CPAIS RPA module training by the Department
              discourages adding values to assets already placed into service in CPAIS, and
              requires additional costs coming in after depreciation begins to be expensed. ASC-
              B&F Real Property Accounting Team shall have a statement from project managers
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              and property management officers that projects are complete. Accountants should
              ensure all costs are in CPAIS before placing the asset into service so as to prevent
              adjustments to prior year.

              b. For deletions of real property individual assets currently in CPAIS that did not
              exist as of September 30, 2001, submit an adjustment request to the Property and
              Working Capital Branch, Real Property Accounting Team, at ASC-B&F. The Real
              Property Team shall facilitate removing the sub-ledger value, if approved by
              Management. If the adjustment is allowed, an offsetting adjustment must be made to
              the recorded audit adjustment. Also see section 22.25. Note: Acquisitions and
              disposals that occur in the current accounting period and in the normal course of
              business must be recorded in CPAIS in accordance with guidance provided in this
              handbook.

         5. Useful Life. Real property assets are assigned a standard useful life based on the
         asset’s project group. The useful life for improvements to existing assets is the greater of
         the remaining life of the existing asset or one-half of the standard project group useful
         life.

         6. Depreciation Start Date. Forest Service begins depreciating assets on June 30th of the
         year the asset is completed and placed into service.

22.2 - Capitalization

22.21 - Threshold

Forest Service implemented a real property capitalization threshold of $25,000 effective
October 1, 2001. Costs incurred for real property assets that are placed in service in fiscal year
2002 and forward that do not meet this threshold must be expensed. All assets placed in service
prior to October 1, 2001, were capitalized under the previous capitalization threshold of $5,000.
Real property meeting the definition of General Property, Plant, and Equipment (GPP&E), must
be subject to capitalization according to the following criteria:

         1. Individual assets (including GPP&E land) are capitalized if the cost of the asset is
         $25,000 or more and meets capitalization criteria. Capitalized land must be capitalized
         separately because land does not depreciate. Capitalization threshold and criteria are
         applied to each asset.

         2. Pooled asset costs are capitalized if the cost of the project is $25,000 or more for the
         asset at specific project group level and if the project meets capitalization criteria. If the
         pooled asset has been determined to be stewardship, the related projects are expensed and
         are not capitalized.
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         3. When determining whether the cost of a developed site meets the $25,000 threshold,
         consider the costs of all integral parts not individually capitalized. A recreation site is
         capitalized to the site for all integral parts of the site. Assets such as buildings on an
         administrative site are considered separately for capitalization determinations.

         4. Reconstruction or additions (improvements) to an existing asset must be capitalized if
         the following criteria are met:

              a. The asset’s capacity is enlarged or increased and the costs are $25,000 or more; or,

              b. The asset’s capacity is improved by upgrading the asset to serve needs different
              from, or significantly greater than, those originally intended (change in purpose or
              functionality); and the total project costs are $25,000 or more; or

              c. The asset’s useful life is extended. The work is not maintenance to ensure the
              asset lives out its useful life or is not maintenance to meet regulatory standards (such
              as the American Disability Act), and the costs are $25,000 or more The status of the
              existing asset (capitalized or not capitalized) has no bearing on the decision to
              capitalize the subsequent improvement. Any costs considered maintenance, even
              though the costs may be substantial, are not capitalized. Also see section 22.27.

         5. Assets acquired through donation, devise, judicial process, exchange, or transfer from
         other Federal entities must be capitalized if capitalization criteria is met and the assets
         will be used in Forest Service GPP&E operations.

         6. Costs of new or reconstructed roads that are part of the Forest Service transportation
         system are capitalized in pooled accounts if capitalization criterion is met. Aggregate
         costs of all roads on the transportation system must be classified by component. As a
         result of the change in accounting policy, real property capitalized job codes are no
         longer issued for road prism project. Engineering service costs for surfaces, if direct
         costs for the specific project, are capitalized to Project Group 22 road surface and must be
         included on the work plan.

         7. Assets transferred to the Forest Service through non-traditional acquisitions (such as
         donations or transfers) are not capitalized if there is no Government purpose or use for
         the asset, or if the asset is deemed to be stewardship.

         8. Public domain and stewardship land are not capitalized. If land is purchased for the
         construction of an administrative or recreation site, the land is capitalized as a separate
         asset to the site itself. The administrative site must depreciate; land must not be set up for
         depreciation.
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         9. Assets constructed for the primary purpose of protecting the environment or its natural
         resources (such as retaining walls to prevent soil erosion) are stewardship assets and are
         not capitalized.

         10. Fuel tanks are considered to be real property if the intent is for a permanent structure,
         the asset is GPP&E, and the capitalization criteria and thresholds are met. Existing fuel
         tanks recorded in the Equipment Management Information System (EMIS) must remain
         in EMIS until they are disposed.

22.22 - Primary Purpose Capitalization Criteria

Assets meeting the dollar and useful life capitalization criteria should be capitalized within their
applicable project group. In those instances where the asset may logically fit into more than one
project group, reasonable judgment is necessary to designate the most applicable project group.
To assist in the judgment, the primary purpose for the asset must be considered. The following
are examples of primary purpose project group decisions:

         1. Parking Lots. Parking lots within a communication site, administrative site, or
         recreation site are capitalized within Project Group 09, 10, or 30, respectively. Parking
         lots are not base assets and are not capitalized separately. Parking lots that are
         determined by the engineer to be part of the main road system are capitalized to pooled
         assets.

         2. Developed Recreation Sites.

              a. Recreation areas that are substantially developed and contain multiple facilities,
              such as campgrounds, picnic areas, pavilions, toilets, boat launches, utility systems,
              and meet the definition of Project Group 30, must be capitalized when capitalization
              criteria is met.

              b. Trailheads are not capitalized; trails and assets to support trails (such as trail
              bridges, signs, interpretive areas, trailheads, and other assets necessary to operate the
              trails for the public) are considered stewardship assets. If a developed recreation site
              is constructed at the trailhead, the engineering and recreation experts should
              determine if the area is a trailhead or a developed recreation site. Developed
              recreation sites termed “trailheads,” and trailheads designated as developed recreation
              sites create confusion for capitalization determinations and are difficult to support in
              audit.

              c. Recreation complexes involving a group of developed recreation sites in the same
              general area, although not physically congruent, must be capitalized as a single
              recreation site. When converting complexes to new land units, make no adjustment
              to the capitalized value, but update the asset and sub-ledger accounts to reference the
              change.
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Job codes must not specify funding from multiple sources or cost pools for capitalized assets.
An individual item of real or personal property should be funded using the primary purpose
program fund. Only one appropriated job code is authorized for the capitalization of real or
personal property. In the case of donated property or cooperative work incorporated into a
project, an alternate or additional capitalized job code may be provided for real property
capitalized projects.

Units should consider the option of combining funds at the unit or regional level (depending on
the need for the asset), rather than using multiple job codes where a smaller portion of the
expense resides at several unit or project levels. The primary purpose rule is applied to all real
property projects, and one appropriated job code is created under the appropriated funding
designated by the unit’s budget officer.

22.23 - Work-in-Progress

Work-in-progress (WIP) (General Ledger Post Type = WP, SGL = 1720) includes new
construction, reconstruction, and additions that meet one or more of the three capitalization
criteria and the capitalization threshold of $25,000. All constructed real property assets must
begin as WIP until put in service. Exceptions to this are assets generated via donations that may
not be captured in the accounting system, and assets resulting from timber sales that are entered
directly into CPAIS annually for the previous year. Post type WP is not used for road
components. Road components will use post type L2. General Property, Plant, and Equipment
(GPP&E) land cost is not developed over time or depreciated.

Costs are not depreciated while coded as WIP. An asset is put into service when it has been
completed and accepted by Forest Service. When the asset is put into service, the in-service date
is entered in the CPAIS sub-ledger. At that time, CPAIS generates accounting transactions to
move the capitalized value to the appropriate general ledger account.

22.24 - Variable Stewardship Assets

Recreation (Project Group 06), other buildings (Project Group 07), and dams (Project Group 26)
may either be stewardship or General Property, Plant, and Equipment (GPP&E) assets,
depending on the asset and its use. The asset is considered stewardship if the asset’s main
function is to protect the forest environment and natural resources. Apply the following criteria
to or when the asset may be stewardship:

         1. If the asset is on a developed site (administrative or recreation), it is not stewardship
         and may be capitalized if it meets capitalization criteria.

         2. If the asset is not on a developed site, but it generates enough revenue to pay the
         majority of maintenance and other annual costs, it is not stewardship and may be
         capitalized if it meets capitalization criteria.
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         3. If the asset is not on a developed site and the main function of this asset is to protect
         the forest environment and natural resources, it is a stewardship asset and the costs are
         not capitalized.

This does not lessen the responsibility of the Forest Service for these assets. These assets are
tracked and managed in the Infra and CPAIS RPM Systems or through program maintenance and
inspection activity. The Forest Service shall perform condition surveys and calculate deferred
maintenance, where applicable, for these assets.

22.25 - Treatment of Historic (Prior Year) Costs

Adjustments to capitalized real property individual asset data in the Financial Foundation
Information System (FFIS) or Corporate Property Automated Information System (CPAIS) that
would result in changes to financial data is made only by the Real Property Accounting Team at
the ASC-B&F. Any adjustment to data in FFIS or CPAIS as it existed in a prior fiscal year
requires management approval. This includes corrections or adjustments to the capitalized value,
the project group, or the in-service date.

Any requests for adjustments to real property accounting data must be submitted to the Property
and Working Capital Branch, Real Property Accounting Team. Adjustments prior to the current
fiscal year deemed necessary must be approved by the Property and Working Capital Branch
Chief and by ASC-B&F Management. The Real Property Accounting Team shall review
adjustment requests to determine the appropriate action, if any print a copy of the adjustment
request and place it in the asset file to evidence the request. The Lotus Notes database may be
accessed in Region 3 Lotus Notes by connecting to the database at “ENTDATA03/E/USDAFS.”

The existing supporting documentation for all historic costs must remain in the asset file until the
documentation retention period has lapsed (sec. 22.29) or property disposed. Real property
accounting files are maintained for 10 years after the disposal of an asset (FSH 6209.11, Records
Management Handbook).

22.26 - Costs to Be Capitalized

Capitalize purchased or constructed General Property, Plant, and Equipment (PP&E) assets at
their full cost, including costs for preconstruction engineering, construction engineering, site
preparation, and costs to remove any pre-existing structures. Consider all the costs described in
this section, including donated costs and any costs not captured through the accounting system
that contribute to the value of the asset. Preliminary design, planning, and National Environment
Policy Act (NEPA) costs are incurred before the final project approval and are not capitalized.
The following costs must be capitalized if they meet the capitalization criteria and threshold:
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         1. Constructed features and leasehold improvements. Do not capitalize costs that are
         incurred prior to project approval or NEPA costs. Beginning in the survey and design
         stage, the following costs must be identified and capitalized after the project has been
         approved and NEPA has been approved:

              a. Actual contract costs paid for work performed (amounts paid to vendors);
              including direct labor; all materials, heavy equipment, expendable small tools
              purchased specifically for the project; and the fees for preliminary and final
              architectural, engineering, and other contracted services for samples, designs, plans,
              drawings, specifications, surveys, cost estimates.

              b. All Forest Service labor costs attributable to the direct cost of the project,
              including the following:

              (1) Direct labor production costs, including force account labor supplied by Forest
              Service personnel, including all costs to Government (for example, Federal
              contributions to taxes and health benefits). Annual leave, sick leave, and
              compensatory time are not capitalized. These costs must not be charged to the
              capitalized project

              (2) The number of days that each person may charge to the project is planned and
              shown on the project work plan. The planned days do not include annual leave, sick
              leave, or compensatory time. Annual leave, sick leave, and compensatory time must
              be charged to a general program job code.

              (3) Forest Service architectural, engineering, and other services for samples, designs,
              plans, drawings, specifications, surveys, cost estimates, and the like that occur after
              the project is approved and NEPA has been completed.

              (4) Direct Forest Service costs for inspection, supervision, and administration of
              construction contracts and construction work.

              (5) Direct costs related to on-the-job supervision, travel, and transportation specific to
              the capitalized project.

              Any costs charged to the capitalized real property project must be included in the
              work plan for the real property job code at the job code and asset level.

              c. The cost of heating, air conditioning, electrical, or similar support equipment that
              is an integral part of a building or site. Record costs to the site where the majority of
              the service is provided or where it is recorded in Infra. If a utility provides service to
              more than one site, classify separately as a multi-site utility in Project Group 08.
              Equipment and other personal property should only be capitalized to the real property
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              project if it is an integral part of the real property asset, and must not be considered as
              GPP&E personal property necessary to carry out the Forest Service mission. This
              equipment must not be recorded in a subsidiary personal property system.

              d. The cost or fair market value of salvaged material used and the cost of transporting
              such material to the site.

              e. The costs of prefabricated structures, such as Butler-type storage warehouses,
              modular units, house-trailers (with or without undercarriages), quonset huts, and
              bridges are capitalized as real property if the intent is at the time of acquisition is for a
              permanent real property structure and the project meets capitalization criteria. The
              costs of such assets are not capitalized if the intent and functional use of the asset is a
              mobile unit, which must have the ability to "pull up and move." An example of a
              mobile asset is a house-trailer used by a survey crew and is moved periodically to a
              new location; this example is considered personal property and is not capitalized as
              real property.

              f. The time, transportation, and travel of hired specialists performing contract
              inspection, supervision, or administration of construction contracts and construction
              work directly related to the specific real property capitalized asset.

              g. The mileage cost for use of Forest Service vehicles may be charged to the project.
              The fixed ownership rate (FOR) on a vehicle may be charged only in increments of a
              whole month and as long as the vehicle is being used only for the direct support of a
              specific real property capitalized project. If, for example, a vehicle is only used for 4
              days of a month on a project, the FOR for the whole month may not be charged for
              the project, but is instead expensed. The FOR for a vehicle must be included in the
              work plan for the real property job code.

              h. The cost of legal recording fees and the cost of obtaining easements, permits, or
              leases, including the cost of the person doing the negotiations for the specific real
              property project. Costs charged to the project must be in direct support of the specific
              capitalized project; percentages may not be used.

              i. Pre-construction and construction engineering costs that occur after the project is
              approved and NEPA has been completed.

              j. Site preparation costs, including removal of pre-existing structures.

         2. GPP&E Land and Land Rights. For those land acquisitions that meet the definition of
         General Property, Plant, and Equipment (GPP&E) land, include all Forest Service costs
         of acquiring land and associated land rights, such as purchase price, search and guaranty
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         of title, notary and recording fees, land surveys of the property being acquired, accrued
         tax liabilities, consents, damages, demolition of existing assets on the acquired site, as
         well as costs associated with the benefits under the Uniform Relocation Assistance and
         Real Property Acquisition Policies Act of 1970 (Pub. L. 91-646; FSM 5420.14b).

22.27 - Capitalization versus Expense Determination

Costs not capitalized are expensed in the fiscal year incurred, including costs for stewardship
assets and land; General Property, Plant, and Equipment (GPP&E) assets that do not meet
capitalization criteria; and maintenance actions. The Property and Working Capital Branch, Real
Property Accounting Team at ASC-B&F must determine whether to capitalize or expense the
cost of improvements according to the following direction:

         1. Land. GPP&E land is capitalized if it meets the capitalization threshold. Stewardship
         land is not capitalized, but is reported on the financial statement as required in Statements
         of Federal Financial Accounting Standards (SFFAS) No. 29.

         2. Non-structural Improvements. All costs related to non-structural resource
         improvements are expensed.

         3. Structural Improvements. Only reconstruction or additions that meet capitalization
         criteria (improves capacity by changing functionality or purpose of the asset, enlarges the
         capacity of the asset, or extends life of the asset beyond remaining useful life, and is not
         maintenance to ensure asset meets standards or lives out its useful life) and costs $25,000
         or more, must be capitalized. Generally, construction projects that add significant
         components to an asset must be considered for capitalization because the project will
         change functionality, increase capacity of an asset, or add useful life. The criteria for the
         capitalization decision are applied to the base asset, such as to a developed recreation site
         or a building on an administrative site. Construction or additions of components to a base
         asset (such as toilets on a developed recreation site) are considered for capitalization only
         when the criteria appropriately apply to the base asset.

              a. Enlarges capacity. The asset improvement must increase the size or capacity of
              the asset. This may be an increase in the square footage of a building, the volume of
              a water or wastewater system, or wider area or wider band of frequencies for a
              communications system.

              b. Changes functionality or purpose (improves capacity). The asset improvement
              must bring the asset to a higher level of use or performance. An example of bringing
              an asset to a higher level of use would be to convert a warehouse into an office
              building.
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              c. Extends useful life. The improvement must result in the asset providing the
              services for which it is designed for a period of time beyond its current remaining life.
              In many instances, these projects are required because the site or facility has
              exceeded, or is close to exceeding, its original useful life. The forest engineer,
              property management officer, and other knowledgeable officer, should jointly make
              the determination of whether an improvement extended the useful life of the asset and
              by how many years, or if the work is maintenance to meet required standards and
              allow the asset to serve its intended useful life.

         4. Maintenance and Upkeep Costs. Maintenance and upkeep costs, such as replacing a
         roof, are expensed no matter how expensive. These costs merely bring an asset's
         condition up to Forest Service standards for maintaining the asset at an acceptable
         operating condition, considering its age and use. Preventive maintenance, such as
         replacing gutters on a building to prevent leaks, is expensed as maintenance. Projects
         necessary to meet The American Disabilities Act (ADA) standards are maintenance.

         5. Personal Property. Do not capitalize as real property any item that is properly
         classified as personal property. This type of equipment tends to be movable and is
         properly classified as personal property and, if capitalized, recorded in the Property
         Management System or the Equipment Management Information System.

Exhibits 01 through 03 illustrate the capitalization versus expense decision process.
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                                                 22.27 - Exhibit 01

                                         Land Capitalization Decision
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                                                 22.27 - Exhibit 02

                                      New Asset Capitalization Decision
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                                                 22.27 - Exhibit 03

                               Reconstruction And Improvement Decision
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22.28 - Documentation Responsibilities

Adequate documentation must exist in each real property asset folder to support the value of
property, regardless of the method used for establishing its value. The type of documentation
that is necessary depends on how the property was acquired. Individual asset files must contain
support for transactions affecting the asset for all fiscal years. Pooled asset files are generally
maintained by fiscal year, as the amount capitalized is an annual collection of costs. Where
actual costs are not captured because the property was donated, develop and retain
documentation of the fair market value.

22.28a - Albuquerque Service Center, Real Property Accounting Team

The ASC-B&F Real Property Accounting Team shall ensure that a file is established for each
current work in progress project related to capitalized real property:

         1. Individual assets obtain and maintain the required documentation to support the actual
         costs capitalized in each fiscal year. Any disposal documentation, such as forms
         AD-107, Report of Transfer or Other Disposition or Construction of Property, and
         AD-112, Report of Unserviceable, Lost, or Damaged Property, must be retained in the
         asset file. If the asset is considered as excess property, a copy of the SF-118, Report of
         Excess Real Property, must be in the file.

         2. Pooled accounts documentation is segregated by the actual road costs capitalized in
         each fiscal year, with documentation to support the classification of costs at asset level.
         Road prism is expensed; only road surface is considered for capitalization.

         3. Once the project is complete, the individual asset is placed into service and
         depreciation begins. Once the audit for that year is complete, the ASC-B&F Real
         Property Accounting Team will send the project accounting data to the unit for placing in
         the historical asset management file.

         4. Disposal documentation, such as forms AD-107 and AD-112, must be retained in the
         historical asset management file. [Note: If property is listed as excess property, an
         SF-118 may be used.] A copy of the signed disposal document must be provided to
         ASC-B&F to write off the associated capitalized costs in the real property accounting
         subsystem. The disposal document (such as AD-107, AD-112, or SF-118) must be
         signed by the property management officer before capitalized costs associated with the
         asset may be written off in the real property accounting subsystem by ASC-B&F Real
         Property Accounting Team.
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22.28b - Contracting Officer and Contracting Officer Representative

The contracting officer (CO) and contracting officer representative (COR) shall coordinate with
the ASC-B&F Real Property Accounting Team on project actions. ASC-B&F Real Property
Accounting Team shall maintain adequate support for all current work in progress project costs
in the current accounting files until the project is complete, the asset is placed into service, and
the audit is completed for that fiscal year.

22.28c - Program Staff

Program staff, such as Engineering, Recreation, and Lands, shall request from the ASC-B&F
Property and Working Capital Branch a capitalization decision, providing information needed to
make the determination. Once the capitalization determination is made, a job code for the
current capitalized project may be requested from ASC-B&F Property and Working Capital
Branch. Program Staff and Property Management staff shall provide documentation needed to
account for capitalized real property projects. Adequate accounting data must be maintained in
the historical asset files once the project is placed into service.

22.28d - Property Management Officers and Technicians

Property managers are directed by Washington Office Acquisition Management staff to manage
all Forest Service GPP&E accountable assets. The property management officer (PMO) or
property management technician (PAT) shall maintain historical asset management records on
all capitalized real property assets. When the capitalized project on an asset is complete and
placed into service, the accounting data is provided by ASC-B&F Real Property Accounting
Team to field unit PMOs for filing in the historical asset management records.

Property management officers must sign project completion forms and disposal documents prior
to submission to ASC-B&F Real Property Accounting Team. Job code requests must be signed
by either the PMO or the real the Real Property Management Officer (RPMO).

22.28e - Unit Budget Officers

Unit budget officers shall determine if funds are correct for the proposed capitalized real
property project and must sign the form FS-6500-244, Job Code Request Form for Capitalized
Project, prior to submission to the Property and Working Capital Branch at ASC-B&F. Ensure
the fund and program fields are correct on form.

22.29 - Documentation Requirements

The following documentation must be gathered and retained in an asset file for both individual
and pooled real property assets. Documentation for current capitalized real property projects is
maintained at the Property and Working Capital Branch at ASC-B&F. When the project is
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complete, the accounting data must be sent to the field unit PMO for inclusion in the historical
asset file. All asset documentation files for real property must be retained for 10 years after the
year of disposal (FSH 6209.11, Records Management Handbook).

New real property individual asset folders must be structured as follows:

         1. The front of the folder must contain asset sub-ledger information; the back of the
         folder must contain the required, pertinent portions of the contract. Required
         documentation to support the asset is located between the sub-ledger information and the
         contract documentation.

         2. Each fiscal year’s activity must be separated. If a project crosses fiscal years, and
         additional folders are required, there must an indicator in each folder indicating where the
         original contract documentation may be located.

         3. For all new projects, a summary for each fiscal year must be in front of that fiscal
         year’s documentation. The summary amount must equal the amount recorded in the WIP
         value stream in CPAIS for that fiscal year.

22.29a - Actual Costs

Actual direct costs charged to the real property job code(s) include (but are not limited to) the
following:

         1. Legal recording fees specific to the capitalized project.

         2. Survey and design costs that occur after the project is approved and NEPA is
         completed.

         3. Pre-construction and construction engineering that occur after the project is approved
         and NEPA is completed.

         4. Site preparation including removal of pre-existing structures. Costs applied to the
         capitalized project code must be specific to the asset; use of percentages for calculation of
         costs is not acceptable.

         5. COR direct project salary and travel costs. Such costs must be specified on the work
         plan.

         6. Force account construction and supervision directly related to the approved capitalized
         project (work and services performed by Forest Service personnel). Such costs must be
         specified on the work plan.
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         7. Expendable small tools and materials that are specific to the project and are not
         recorded in the personal property system. PCMS cards may not be used with real
         property job codes.

         8. Outside engineering and construction services. Costs applied to the capitalized project
         code must be specific to the asset; use of percentages for calculation of costs is not
         acceptable.

         9. Salvaged material used.

         10. Transportation costs.

         11. Prefabricated structures.

         12. All components of an asset necessary to place the asset into service, such as locks
         and keys for a newly constructed building.

22.29b - File Documentation Requirements

All capitalized cost transactions must be documented. For any single contract or purchase order,
a copy of the actual procurement document must be included in the asset file. The use of the
Purchase Card Management System (PCMS) is not authorized for capitalized real property
projects.

For financial statement audit purposes, any current year transaction may be selected for audit
testing, regardless of amount, and documentation must be provided to the auditors. A copy of
any documentation provided to the auditors must be identified as such and placed in the asset
file, or readily available. Following are examples of items that may be requested by the auditors:

         1. Transaction Register of Obligations Report (TROB). The TROB provides all
         transactions related to the cost of the capitalized project such as goods or services that
         have been received, salary costs, and other related expenditures.

         2. Work plan. The project work plans, as recorded in the Work Plan System, identify the
         project costs to be capitalized, such as labor costs, contracts, supplies or materials, and
         vehicles. Work plan costs may be linked to Financial Foundation Information System
         (FFIS) transactions by the real property job code. Work plans must be specific to the
         capitalized project and asset.

         3. Summary sheet. A summary sheet that validates the capitalized value by fiscal year is
         prepared by the Real Property Accounting Team at ASC-B&F and must be included in
         the file folder.
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         4. Contract or purchase order. A copy of the pertinent portions of the contract associated
         with the asset:

              a. Award notice signed by the contracting office and contractor.

              b. Schedule of bid items.

              c. Scope of work.

              d. Specification sheets, if necessary to support scope of work.

              e. All modifications to contract.

              f. Job code request form for capitalized projects.

              g. All invoice and payment vouchers, regardless of value.

         5. PCMS justification and support. The use of PCMS for real property is not authorized.
         To mitigate audit findings when PCMS is used, the following is required:

              a. Justification of use of PCMS for real property asset.

              b. Copy of invoice.

              c. Copy of warrant, authority, or agreement held by the PCMS cardholder.

              d. Copy of PCMS reconciliation screen.

         6. Project Completion Form. A signed form FS-6500-246, Real Property Project
         Completion Certification, must be in the real property accounting folder, once the project
         has been placed into service. The unit project manager or COR and the property
         management officer (PMO) shall sign and send the document to ASC-B&F Real Property
         Accounting Team, indicating date the asset was placed into service. The ASC-B&F Real
         Property Accounting Team shall ensure all transactions are in and then enter the adjusting
         entry into CPAIS. The ASC-B&F Real Property Accounting Team shall wait 3 months
         to make the entry in CPAIS and start depreciation, to ensure all systems have been
         updated with all final transactions.

         The ASC-B&F Real Property Accounting representative shall coordinate with the COR,
         Engineering, or other program staff to determine if there are maintenance and repair costs
         included in the contract that should not be capitalized. These non-capitalized costs must
         be charged to an expense job code. If the contract is associated with more than one asset,
         separate job codes must be set up and charged, and copies of the contract must be
         retained in each asset file. Distribution for payments for a contract associated with
         multiple assets must be delineated to the specific asset without use of percentages.
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         7. Procurement or Acquisition Document. A copy of any procurement or acquisition
         document relating to an asset with a total cost of $25,000 or greater. Examples include:

              a. Purchase orders with associated Integrated Acquisition System (IAS) property
              receipting reports. (All lines of the purchase order related to a given asset must be
              added to determine if the document is $25,000 or over).

              b. The documentation folder should maintain a copy of the receipting document. If
              invoices are sent directly to the National Finance Center (NFC) for payment, the
              receipting document is required.

              c. Equipment rental agreement (such as heavy equipment rental).

              d. Service Agreement (such as contract for inspection services).

         8. Cooperative or Collection Agreements. These include agreements with other Federal
         agencies, States, or private entities. Cooperative Agreements may be captured in
         Financial Foundation Information System (FFIS) by the accounting. A copy of the
         signed agreement must be maintained in the documentation folder.

         Real property asset costs incurred through a reimbursable agreement (fund category “R”)
         must be expensed. The resulting real property asset, or portion thereof, must be treated as
         a donation or a transfer to Forest Service upon completion of the project, if the asset is
         deemed necessary to Forest Service operations and the cost of the project meets
         capitalization criteria. All costs related to this construction must meet the same folder
         documentation requirements as required for any real property capitalized project. Use
         Form FS-6500-245, Donation - Transfer-In Form for Capitalized Assets is required.

         9. In-Service Date Documentation. While CPAIS assigns a depreciation start date of
         June 30th, the fiscal year that the asset was entered into service must be documented.
         Examples of the documentation include a letter of final inspection or a final contract
         invoice. A FS-6500-246, Real Property Project Completion Certification, form certifying
         project completion and indicating that all force account and financial elements have been
         completed must be completed for all capitalized assets. The ASC-B&F Real Property
         Accounting Team shall wait until all costs are in before placing the asset into service.
         Optimal waiting time to ensure all costs have cleared is 3 months from the date the unit
         has indicated the project is complete.

         10. Donation and Other Costs. When $25,000 or more, capitalize at their fair market
         value, new construction, reconstruction, or additions made to existing constructed
         features through non-appropriated transactions. Include all costs necessary to place the
         asset in use. The following costs must be captured:
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              a. Donated Goods or Services. Capitalize using the fair market value at the time of
              donation. Prepare a form FS-6500-222, Asset Valuation Documentation, and attach
              documentation supporting the fair market value. An example of documentation used
              to support the fair market value is an engineering appraisal, which includes the
              methodology, citations of data sources used, and calculations used in value
              determination. The estimate or appraisal must be signed and dated by the preparer.

              b. Improvements by a Cooperator or Permittee. Capitalize at actual costs to
              Government or fair market value at the time of transfer to the Forest Service. Where
              the agreed-upon value of the improvement is prescribed in the agreement with the
              cooperator, include pertinent sections of the agreement. Otherwise, examples of
              documentation used to support the fair market value must be placed in the file. The
              appraisal must be signed and dated by the preparer.

              If the cooperator was another Federal agency, the funds for the project were obtained
              through an agreement using reimbursable funds (fund category “R”), and the actual
              costs should be recorded for the asset. Documentation includes all documentation
              required for any real property asset.

              c. Assets Completed Under a Timber Purchase Contract. For timber purchase
              contracts, capitalize the value obtained from the Road Credits Authority Accounting
              Report (TSA 451-01) produced by the Automated Timber Sale Accounting system
              (ATSA). This report includes the cost allocated to the separate road components.
              When audited, the following must be provided to ASC-B&F Property and Working
              Capital Branch at to support the audit sample:

              (1) Original contract signature page.

              (2) The original schedule of items specific to the asset being audited, and any
              modifications to the schedule of items.

              (3) The year-end forest totals, TSA 451-01, Road Credit Authority Accounting
              Report. This report is the posting document to the CPAIS sub-ledgers and must agree
              with the posted amount.

              (4) Documentation for credit transactions related to the asset being audited. Source
              documents include the engineer’s authorization or other similar authorizations to
              establish purchaser credits or specified roads credits for the specific asset.

              (5) If the project for an asset identified in ATSA as a timber-related asset has been
              completed, documentation to support the completion of the asset is required.
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              The ASC-B&F Real Property Accounting Teams shall provide auditors with a
              spreadsheet that identifies each asset included in the values added to CPAIS for
              timber-related assets, sale or contract number, the Unique Asset Identifier (UAI)
              assigned to the asset, and value credited to the asset on the TSA 451-01 report. This
              applies to multiple assets being built under a timber sale contract. The total value for
              all assets must equal the total shown on the TSA 451-01 report for the forest.

              d. Right-of-Way Construction and Use Agreement. Capitalize only the road value
              constructed by the cooperator, less any Forest Service payments made to the
              cooperator. Forest Service payments must be captured in FFIS under a real property
              job code. The cooperator’s cost must be derived from (or supported by) the
              agreement or from other supplementary documents.

              Documentation for assets acquired through agreements must include copies of the
              agreement, including actual supplements, work plans, and balance sheets. If actual
              cost documentation does not exist, capitalize assets at fair market value. A dated and
              signed engineering appraisal, including the methodology, citation of data sources
              used, and calculations, may be used to document fair market value.

              e. Transfers Within or Between Federal Agencies. Record the value (capitalized
              value, accumulated depreciation, and in-service date) carried in the transferring unit’s
              records. Obtain copies of the documentation file from the other agency or Forest
              Service unit. Ensure documentation is complete for both the costs and the in-service
              date.

              If the other agency is unable to provide a value, capitalize at fair market value. An
              example of fair market value documentation is an engineering appraisal, which
              includes the methodology, citation of data sources used, and calculations used in the
              value determination. The appraisal must be signed and dated by the preparer.
              Transfer documentation may be used to support the in-service date when the fair
              market value is used for capitalization.

              f. Land or Other Asset Exchange. Capitalize the value of land or other asset obtained
              by exchanges when the intended use is for a developed site (GPP&E) using the
              following order of preference:

              (1) The fair market value of the assets acquired at the time of the exchange, then

              (2) The fair market value of the asset surrendered, if it is more readily determinable
              than that of the asset acquired.
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              In the event that cash consideration is included in the exchange, the cost of the asset
              acquired must be increased by the amount of cash consideration surrendered, or
              decreased by the amount of cash consideration received.

              Include a copy of the appraisal documentation that includes fair market value
              information for acquired asset. If not available, document the costs with the appraisal
              of the surrendered assets, and if cash consideration is part of the transaction, include
              the payment or billing document.

              g. Assets Abandoned. Capitalize real property abandoned by others on Forest
              Service land at fair market value if the Forest Service considers the asset necessary to
              Forest Service operations and places the abandoned real property asset in service.
              Examples of documentation used to support the fair market value are an engineering
              appraisal, which includes the methodology, citation of data sources used, and
              calculations used in the value determination. The appraisal must be signed and dated
              by the preparer.

              h. Job Corps Work Projects. Assets deemed property of the Department of Labor
              will not be capitalized as Forest Service GPP&E real property. If the Job Corps
              constructs a Forest Service GPP&E asset, capitalize the value obtained from the
              Human Resource Program Accomplishment Report, form FS-1800-16. Include a
              copy of the form FS-1800-16 in the documentation file. This report should include a
              value and date of completion.

23 - REAL PROPERTY LIFE CYCLE

All acquisition or construction of real property assets goes through a basic life cycle. Project and
funding identification may span several years because of out-year planning and budgeting. This
may also happen during the execution year (including Congressional earmarks) depending on
when the need is identified. Most capital improvements are identified in the out-year planning
and are generally categorized as the “preliminary activities.” Costs incurred before the project is
approved and NEPA is completed are expensed. The real property life cycle includes
depreciation and disposal. Documentation to support listing real property as excess property
(SF-118), or support for disposal (AD-112), or transfer (AD-107) is required.

23.1 - Identification of Real Property Projects

         1. Sources for Identifying Real Property Projects.

              The Forest Plan provides the basic premise for what activities and infrastructure are
              needed and anticipated to be on the forest. All projects may not be identified in the
              plan, but must comply with the basic essence of the plan. There are four program-
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              level plans that provide information on the existence, or planned existence, of types
              of assets that may be capitalized. These plans are not all-inclusive, but must include
              the majority of projects that are initiated in out-year planning.

              a. The Facilities Master Plan is a list of the existing facilities and a schedule of
              planned facilities created by each forest. In addition to showing facilities, the facility
              master plan also lists any administrative sites (land) that may be acquired for any new
              or expanded sites. Forests are required to have a current Facilities Master Plan
              including planned, existing, and excessed facilities.

              b. Recreation Site Assessments are completed for all existing and planned recreation
              sites. The basic focus of this assessment process is to determine those sites that
              provide special opportunities so that the recreation sites retained and managed will
              balance with operating maintenance capabilities.

              c. The Road Analysis Process (RAP) includes all existing and planned passenger
              vehicle roads (maintenance levels 3-5), identifies road maintenance objectives, and
              roads to be decommissioned.

              d. The Land Acquisition/Adjustment Plan identifies the land the Forest Service
              would like to acquire and the land it is willing to convey. It also identifies excess
              property, such as administrative sites no longer needed.

         2. Preliminary Project Analysis. A preliminary project analysis or design narrative is
         accomplished to determine the project scope, including uses, size location, and
         preliminary design parameters. During this step, the benefit of owning versus leasing is
         also evaluated. Generally, any necessary NEPA analysis is conducted at this stage.

Once the preliminary project analysis or design narrative is completed, the capital improvement
project is added to the Capital Improvement Plan (CIP). Projects are identified at both the forest
and regional office levels, and evaluated for merit and funding year. All regions track facility
construction and roads projects that are $250,000 and above. Smaller projects may not be
identified at this point.

23.2 - Identification of Funding

23.21 - Requests for Projects under $250,000

Through the out-year budget request process, the forests and regions identify the projects they
need to fund in a planning year, usually 2 to 3 years in advance. Funding requests for projects
under $250,000 are made through a minor facility request. The minor facilities requests are
often not identified until the year prior to the execution year.
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23.22 - Request For Projects $250,000 and More

Approximately 9 months prior to the start of a new fiscal year, the Congressional Budget
Justification is submitted for the execution year where facility projects and associated roads,
$250,000 and above, are individually identified. In addition, an approved acquisition plan is
supplied to Acquisition Management prior to the new fiscal year to identify what procurement
actions are necessary for the execution year.

23.23 - Work Plans

Work plans identify the project, as well as the estimated time, equipment, labor, supplies,
materials, contracts, and other resources that are needed to complete the project.

The Annual Appropriation Bill contains the funding for the current fiscal year, plus any
Congressional earmarks. Any differences in the amount of anticipated budget authority and the
actual amounts received may require modifications to the work plan. The work plan is specific
to asset and job code. Audit of real property capitalized projects includes a request for the work
plan that reflects the specific capitalized project.

23.24 - Job Codes

The ASC-B&F Real Property Team shall coordinate with the program and procurement staffs to
establish capitalized job code(s) for the project. The form FS-6500-244, Job Code Request Form
for Capitalized Projects, must be used for creating real property capitalized job codes. The real
property job code(s) established for the project must be used for all capitalizable costs for the
asset. The ASC-B&F Property and Working Capital Branch shall consider the funding source(s)
designated by the unit budget officer for the project, which may be appropriated funds,
cooperative agreement funds, or special earmarked funds. In reviewing requests, ASC B&F
Property and Working Capital Branch shall ensure primary purpose is applied to the project,
working with field unit as necessary.

The capitalization determination, system updates, and signed job code request form are required
before the job code is created. The capitalization determination will be documented with
notification from ASC B& F Property and Working Capital Branch for the field unit that the
asset meets capitalization criteria. The new job code will accompany such notification.

The ASC-B&F Property and Working Capital Branch must ensure that capitalized assets are
established by creating the sub-ledger in CPAIS. Creating the sub-ledger also creates the UAI in
CPAIS which will upload that data to the UAI Table (UAIT) in FFIS nightly. Creating the sub-
ledger in CPAIS and establishing the job code in FFIS must take place as soon as the project has
been approved and before work begins.
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Decisions for capitalization for all real property projects are made by the ASC B&F Property and
Working Capital Branch. To obtain a job code for any new or on-going real property project,
complete form FS-6500-244 and obtain approvals from the local budget officer and the RPMO.
The RPMO may be the PMO at the field level. If no PMO resides at the unit level, the regional
PMO may sign. Once completed, forward the form to the ASC-B&F Real Property Team. The
budget officer approves funding, as well as appropriateness of funding to be used. The property
management officer (PMO) acknowledges the real property project related to a capitalized asset.
ASC-B&F Property and Working Capital Branch shall contact the unit if any additional
information is needed or if there are questions needed to make the capitalization determination.

Unit PMs ensure that the asset exists in CPAIS. If the project is for a new asset, the unit enters
the asset into Infra (I-Web). Infra replicates to CPAIS daily. If the asset does not show up in
CPAIS, ASC-B&F Property and Working Capital Branch may not build the sub-ledger in
CPAIS, and therefore, may not create the job code.

If the asset exists in CPAIS, and the project meets capitalization criteria, the ASC-B&F Property
and Working Capital Branch shall respond within 2 working days, unless there are questions that
must be answered prior to awarding the job code. 1. If the project is for a new asset, ASC-B&F
Property and Working Capital Branch must determine the following:

              a. The asset is not a stewardship asset, meaning that its chief purpose is not to protect
              the environment or its natural resources. Note: Projects on developed recreation sites
              or administrative sites are not stewardship; such projects are considered for
              capitalization. NEPA process is complete and project has been approved.

              b. The asset will have a useful life of 2 years or more.

              c. The asset will have a cost of $25,000 or more.

         2. If the project is an improvement to an existing asset, ASC-B&F Property and Working
         Capital Branch must ensure that one of the three following capitalization criteria is met,
         and that the cost of the project is $25,000 or more:

              a. The asset’s useful life is extended beyond its current useful life and the work is not
              maintenance. Maintenance includes work to bring an asset to standard, and any work
              that allows the asset to continue service for its useful life. When doing work to a
              recreation site, the criteria applies to the recreation site in most cases.

              b. The asset’s capacity is increased.

              c. The asset’s functionality (purpose) is changed.
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Once the determination is made that one of the three criteria above is met, and the costs are
$25,000 or more, the job code must be established for the work, provided the asset exists in
CPAIS. The unit is then formally notified that the project meets capitalization criteria and the
job code is released.

The FS-6500-244, Job Code Request Form for Capitalized Project, with instructions, is found on
the Lotus Notes database Web site for the Property and Working Capital Branch:
ENTDATA03/E/USDAFS in Region 3. The ASC B&F Property and Working Capital Branch
shall review the Fund/Program Combination reference Table (FPCT) in FFIS to ensure the
program fund and cost is established for the fiscal year is used in the real property job code. If
the table has not been updated, a request must be submitted through the region, station, or Area
to the Washington Office Financial Management Systems, through the FFIS Help Desk, for the
update.

Capitalized real property job codes are created in the miscellaneous job code table (MJOB) by
the ASC-B&F Real Property Team, Property and Working Capital Branch. Real property
individual asset job codes begin with “Q” and pooled asset job codes begin with “Y.” The ASC
B&F Property and Working Capital Branch established the characters “YT” to indicate job codes
for administrative costs associated with capitalized timber sale roads projects. In addition, a job
code beginning with “YY” indicates a capitalized job code to capture continuing costs for
capitalized road projects that began in a prior year. Positions 3 through 6 of the job code number
are for the Asset ID number of the asset. The second position may be used to designate the
funding source to show a 5 digit Asset ID (from UAI) or as a zero place holder. Positions 7 and
8 are used to identify the fiscal year the job code is established. Regardless of the coding
convention of the job code number, the UAI and the GL Post Type fields in the MJOB must be
populated. Capitalized real property job codes associated with agreements must be created by
the Real Property Team and sent to ASC-B&F Receivables and Collection Agreements (RACA)
Team for release to the field unit.

The job code may not be created if the UAIT table is not populated with the specific asset
information; the Fund/Program Combination Table (FPCT) does not contain the fund and
program combination associated to the project; and the General Ledger Post Type (GLPT) does
not contain the specific general ledger post type. FFIS validates real property job codes against
the Unique Asset Identifier (UAIT), FPCT, and GLPT. Accurate coding of the UAIT and MJOB
are imperative to ensure that all cost post to the correct GL account and CPAIS sub-ledger.

There are three GL Post Types for use with real property job codes. All individual asset job
codes must use the work-in-progress (WP) post type to collect the costs that will be capitalized in
general ledger account 1720, Work in Progress. When the asset is put into service, the ASC-
B&F Property and Working Capital Branch shall change the job code GL post type to “IN”
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indicating that the asset is in service. Changing the GL post type to “IN” ensures that any further
charges to the job code will be expensed. Pooled asset job codes use the GL post type of “L2” to
collect costs in general ledger account 1712. Because pooled accounts are put into service at
fiscal yearend automatically by CPAIS, the RPAS does not need to change the GL post type.

No modifications to job codes must be made without processing a request action through the
CO/COR; and distribution of the modification to the originators. Work plan must be updated
accordingly.

Forest Service and its cooperators enter into a variety of agreements that include the acquisition
or construction of real property. In some instances, ownership of the property must reside with
the Forest Service after the terms of the agreement are completed. If the agreement includes the
purchase or construction of real or personal property, the Forest Service incurs the costs for the
Property and then bills the cooperator. Everything purchased with a reimbursable (fund category
“R”) job code is considered an expense because the costs are borne by the cooperator.
Therefore, all costs for real property acquired or constructed using the reimbursable (fund
category “R”) job code must be expensed by Forest Service. Ownership of any assets acquired
or constructed under agreements must be specified in the body of the agreement. All real
property costs incurred using the reimbursable (fund category “R”) job code must be accounted
for as a transfer (Federal) or donation (non-Federal) to Forest Service upon completion if the
project meets capitalization criteria and is a GPP&E asset. Ownership of all assets constructed
or placed on Forest Service land will pass to Forest Service (by way of a transfer or donation) or
will be removed from Forest Service land by the cooperator.

FSH 6509.11k, section 51.12, defines the allowable costs that may be charged to wildfire
preparedness (WFPR) and fire operations (WFSU) for preparedness personnel and equipment.
Capitalized real property projects do not meet the criteria for using WFPR or WFSU funds.

23.3 - Planning

Program staffs, generally Engineering or Recreation, are responsible for establishing and
updating all real property project plans in the work plan system. The project plan identifies force
account, contracts, materials and supplies, equipment, and vehicles that are needed for the
project. The Budget staff is responsible for ensuring the funding of a project is appropriate at the
time the project is approved. All costs associated with the planning phase, and prior to approval
of the project, are expensed. They are not part of the capitalized costs of the asset.

The Infra data steward establishes the asset record in the Infra system with a “Planned” status
until preliminary survey and design is complete. Once the project is approved, the Infra data
steward changes the status to “Under Construction” and notifies the ASC-B&F Property and
Working Capital Branch to create a sub-ledger in CPAIS when a capitalization decision is
requested or when a capitalized job code is requested. The ASC Property and Working Capital
Branch establishes and maintains an asset folder for filing capitalized transactions in accordance
with capitalized real property documentation requirements.
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23.31 - Construction

To maintain the asset folder, the ASC-B&F Property and Working Capital Branch shall
coordinate with the unit’s designated contact to monitor project completion. These unit staffs
shall inform the ASC-B&F Property and Working Capital Branch of activities related to the
project that affect accounting, such as issuing contracts or modifications, purchase orders, and
land acquisition that will have financial impact on the capitalized project to ensure that the
accounting transactions are coded correctly. These staffs shall provide the ASC-B&F Property
and Working Capital Branch with asset file documentation. Sources of information include the
CO or COR daily diaries; change orders that affect the cost or scope of the project, including
construction services and force account activity; COR review and approval of invoices and
progress payments; design and construction reviews by Procurement, Engineering, or other
program staffs; and other similar documents as may apply to specific conditions or activities.

During the monthly interface from Financial Foundation Information System (FFIS) to CPAIS,
transactions generated in FFIS for capitalized real property projects are posted to the appropriate
asset sub-ledger in CPAIS. The ASC-B&F Property and Working Capital Branch shall monitor
financial transactions by running the FFIS monthly Transaction Register for Obligations (TROB)
report for all project job codes. The ASC-B&F, Property and Working Capital Branch shall
reconcile TROB transactions with CPAIS and with the asset file to ensure that project costs are
being recorded correctly. The reconciliation with CPAIS must include the review and resolution
of rejected transactions in CPAIS. The asset file must be updated with proper documentation as
described in Capitalized Real Property Documentation Requirements.

Where a contract includes work for more than one asset, the contract payments must assign
actual costs to specific assets. Percentage distribution is not acceptable for multiple assets on a
contract or purchase order unless all assets are identical, and cost of each asset is exactly the
same.

The “Schedule of Bid Items” must be attached to all Requests for Contract Action/Purchase
Orders for review. Where multiple assets are included on the contract, the line items to each
asset must be segregated and totaled. Invoices must be date stamped and reviewed for
completeness and accuracy. The COR shall attach a contract summary sheet to each invoice
submitted to the CO for approval and payment. If the invoice is defective (for example, does not
contain enough information for each line item and payment requested), the COR shall return it to
the contractor identifying the missing information required for a complete invoice. The COR is
responsible for indicating cost distribution to each asset, and shall be prepared to show costs tie
back to the Schedule of Bid Items. All required signatures are included on the payment
document.
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23.32 - Acquisition

When a construction project is complete, the ASC-B&F Property and Working Capital Branch
shall review the contract documents to ensure that all costs have been captured and the
Contracting Officer’s Representative (COR) shall perform the final inspection along with
Engineering or other program staffs to ensure that all contract provisions have been met. The
ASC-B&F Property and Working Capital Branch shall note when the final payment is made,
ensure that all transactions have been recorded in the CPAIS sub-ledger, and determine that all
required supporting documentation is in the asset file.

It is imperative that ASC-B&F Property and Working Capital Branch ensure all transactions
related to the capitalized asset are updated in CPAIS. Any subsequent transaction may not
update CPAIS. If any subsequent transactions are material, the ASC-B&F Property and
Working Capital Branch shall prepare an adjustment request form and request permission from
management to make a prior-year adjustment. No accounting adjustments to capitalized assets
are authorized at the field level. Accounting adjustments related to capitalized real property
must be approved in the ASC-B&F Property and Working Capital Branch.

When the ASC-B&F Property and Working Capital Branch is assured that all costs (contract or
other) and documentation have been collected, the ASC-B&F Property and Working Capital
Branch shall obtain the form FS-6500 246, Real Property Project Completion Certification
signed by both the contracting officer’s representative (COR) or project manager, and the
property management officer (PMO). The ASC-B&F Property and Working Capital Branch
shall review and sign the certification, and put the asset into service in CPAIS. The ASC- B&F
Property and Working Capital Branch should wait 3 months to ensure all costs are in before
placing the asset into service.

The ASC-B&F Property and Working Capital Branch shall then modify the job code on the
MJOB in FFIS to ensure that any missed charges are not capitalized in the general ledger by
changing the general ledger post type from WP to IN. Failure to correct the general ledger post
type in the job code may result in rejected transactions in CPAIS.

CPAIS generates the accounting transactions to move the asset from GL 1720 to the appropriate
asset account:

         1. AM/W2 - Transfers Buildings WIP from GL 1720 to 1730.

         2. AM/W3 - Transfers Other Facilities WIP from GL 1720 to 1740.

         3. AM/W4 - Transfers Leasehold Improvements WIP from GL 1720 to 1820.
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23.4 - Donation

Donated assets are the non-reciprocal transfers of assets (or portions of assets) or services from
State or local governments, individuals, or others not considered part of the Federal Government.
Forest Service receives donated labor and materials that may be incorporated into a new or
existing asset in addition to donations of complete assets. The PMO shall document donations
on Form AD-107, Report of Transfer or Other Disposition or Construction of Property. The
ASC-B&F Property and Working Capital Branch shall capitalize any donated new construction,
reconstruction, or additions to existing assets at their fair market value, as soon as possible after
the donation occurs, if the capitalization criterion is met. The appraisal must be signed and dated
by the person preparing the documentation. If actual costs for the donation are known, use those
costs to record the donation and ensure that the actual costs are adequately documented in the
asset file. Include all costs incurred to place the asset into service. In such cases, the ASC-B&F
Property and Working Capital Branch shall maintain documentation files for any capitalized
project.

Donated assets may not be entered via CPAIS until a posting model is available, with approval
by management and the Department. Notification must be made when FFIS posting models are
available.

The appropriate Infra data steward shall create the asset record in the Forest Infra database and
provide the Infra structure number (asset ID) for the asset to create a sub-ledger in CPAIS.
Obtain in-service date information by completing the form FS-6500-245, Donation - Found -
Transfer-In Form for Capitalized Assets.

23.41 - Donated Land

If donated land is to be used as General Property, Plant, and Equipment (GPP&E) land, the ASC-
B&F Property and Working Capital Branch shall document the supporting value of the donated
land through appraisal (FSH 5409.13, ch. 20), from the Forest Service land appraiser, to support
sub-ledger value. Donated land is only capitalized if it is used in conjunction with a developed
site (such as administrative or recreation site) and meets the capitalization threshold.

23.42 - Reimbursable Agreements

Under a reimbursable agreement, the performing entity provides goods and services for the
benefit of the requesting entity:

         1. Forest Service as the Performing (servicing) Entity. Real property asset costs arising
         from reimbursable agreements may not be capitalized where Forest Service is the
         performing entity and a reimbursable (fund category “R”) job code is used. Any
         capitalize real property assets, or portions thereof, must be transferred or donated to the
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         Forest Service. The ASC-B&F Property and Working Capital Branch shall obtain a copy
         of pertinent sections of the agreement and support for all material costs in the asset
         accounting file.

         2. Forest Service as the Requesting (funding) Entity. Real property asset costs arising
         from agreements may be capitalized where Forest Service is the requesting entity and a
         reimbursable (fund category “R”) job code is not used.

The ASC-B&F Property and Working Capital Branch shall coordinate with Agreements staff and
the property management officer to determine the status of any new or existing projects that will
result in capitalizable assets or improvements to existing assets.

23.43 - Donated Goods and Volunteer Services

Capitalize goods or services at the time of donation using the fair market value. Fair market
value is determined through an appraisal or estimation process, including methodology used and
citation of data sources, as well as calculations used in the value determination. Apply the
capitalization criteria and the capitalization threshold to the project.

23.44 - Job Corps Work Projects

Capitalize the value obtained from the Human Resource Program Accomplishment Report, form
FS-1800-16, for any real property constructed by Job Corps if the asset is a Forest Service
GPP&E asset. Assets deemed as property of the Department of Labor (DOL) will not be
capitalized as Forest Service real property assets. The form FS-1800-16 should include a
description of work accomplished, a dollar value, and a date of completion.

23.5 - Other Real Property

23.51 - Timber Sale Specified Road Credits

The ASC-B&F Property and Working Capital Branch shall consult with the timber sale
accounting (TSA) coordinator at unit level to identify audited transactions related to assets
obtained as a result of timber sales. Real property accounting folders for timber sale assets are
not maintained at ASC-B&F Property and Working Capital Branch.

Contracts written in 1999 and prior may have road components built by a timber purchaser as an
overall reduction in the amount paid for the timber (PRC) or as specified assets in timber
contracts issued after 1999 (SRD). The values of the road components built in this manner are
tracked in the ATSA system. If these values meet the capitalization threshold, they must be
posted to the general ledger and the appropriate CPAIS sub-ledger. Because ATSA does not
interface with the accounting system (FFIS), the ASC-B&F Property and Working Capital
Branch shall obtain current TSA 451-01, Road Credits Authority Accounting Reports, from the
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TSA Web site. The value from the “Total Construction & Reconstruction” column and the
“FYTD” row is used to allocate costs to the separate surface component and to bridges. The
value for the surface components must be added to the pooled road accounts and bridges must be
added to the individual bridge asset accounts.

The TSA coordinator and road engineer shall ensure that individual bridge construction is
identified separately on the contract. The contract must provide backup for bridge identification
and valuation. The “Final Bridge Acceptance Letter” must identify completed bridges. The
ASC shall consult with the TSA coordinator to identify the bridges with payouts reflected on the
TSA 451-01 report. The ASC-B&F Property and Working Capital Branch shall coordinate with
the unit contact to ensure each bridge is established in Infra, so a sub-ledger may be created in
CPAIS for those bridges that meet capitalization threshold.

Annually, a spreadsheet is prepared by ASC-B&F Property and Working Capital Branch to show
all timber assets updated for the current fiscal year. Once reconciled to the TSA 451-01 report
and approved by management, the values must be added to CPAIS as a docload. The request is
sent to the Department, who may require the Forest Service to enter each asset value for the
docload into CPAIS, rather than complete the request as a docload. The ASC-B&F prepares a
timber accrual for the last month of the FY, and when actual data is received for that month, the
correct entry is made and the accrual is reversed.

When multiple bridges are built under a timber sale contract, the amount for each bridge,
structure ID number from Infra, sale or contract number, the Unique Asset Identifier (UAI)
assigned to the bridge (where the total value of the bridge per contract is greater than $25,000),
and value credited to the bridge on the TSA 451-01 report is shown on the annual docload to
CPAIS. The total value for all bridges must equal the total shown on the TSA 451-01 for the
Forest.

23.52 - Roads Constructed Under the Provisions of Road Right-of-Way
Construction and Use Agreements

Capitalize only the road value constructed by the cooperator, less any Forest Service payments
made to the cooperator in CPAIS until a posting model becomes available. Additions to real
property capitalized value via CPAIS must be approved by management and by the Department.
Refer to the agreement’s actual supplements, balance sheets, and other reports to determine road
construction values. Refer to ATSA and FFIS reports for collections or payments made to
cooperators. Allocate costs to road surface and bridges. Coordinate with road structure
engineers for individual bridge values and to record bridge data in CPAIS.
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23.53 - Roads Constructed by Those Other Than the Forest Service or Timber
Purchaser

Capitalize roads constructed by parties other than the Forest Service or timber purchaser; if the
road is on National Forest System land and is on the Forest Service Transportation System. An
appraisal or engineering estimate of the fair market value of the road must be provided, as well
as the date of transfer to the Forest Service. The appraisal or engineering estimate must show the
allocation of the cost to the road surface and provide a breakout for individual bridges. ASC-
B&F Property and Working Capital Branch must work with road structure engineers and
property management officer for information supporting the entry of bridge data into CPAIS.

23.54 - Improvements Made by a Forest Service Concessionaire

Concessionaires operate under Forest Service permit to use Forest Service assets (such as
campgrounds) to provide services to the public. The fee paid to the Forest Service for use of the
facilities is offset (fee offset) by the cost of maintenance and improvements performed by the
concessionaire. New construction of real property assets is not allowed under the terms of the
permit; however, concessionaire improvements to existing assets that meet capitalization criteria
and become property of the Forest Service when completed should be capitalized. Obtain signed
copies of the work agreement and final expense report from the permit administrator to
determine and support the value of the capital improvement.

23.55 - Asset Exchanges

Capitalize assets that meet criteria, including GPP&E land, obtained in an exchange transaction
between the Forest Service and a non-Federal entity, using the following order of preference:

         1. The fair market value of the assets acquired at the time of exchange;

         2. If the fair market value of the asset surrendered is more readily determinable than the
         asset acquired, the capitalized cost must be the fair market value of the asset surrendered;
         or

         3. In the event that cash consideration is included in the exchange, the cost of the asset
         acquired must be increased by the amount of cash consideration surrendered, or
         decreased by the amount of cash consideration received.

23.56 - Abandoned Property

Capitalize real property abandoned by others on National Forest System lands at current fair
market value, if the Forest Service places the property into service and it meets capitalization
criteria. A Forest Service engineer or appraiser shall provide signed documentation of the fair
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market value determination. The property manager or property management officer shall
prepare a form FS-6500-222, Asset Valuation Documentation, and attach the estimate or
appraisal, before submitting to ASC-B&F Property and Working Capital Branch for entry into
CPAIS.

23.57 - Additions or Improvements Made by Permittees

Apply capitalization criteria and threshold to new construction features made by permittees when
they become the property of, and are put into use by, the Forest Service. An example is a road
constructed during a mineral exploration which is recorded in the Forest Service roads system.
Coordinate with a Forest Service engineer or appraiser, depending on asset type, to provide
documentation of the fair market value at time of donation to the Forest Service. The PM or
PMO will prepare a form FS-6500-222, Asset Valuation Documentation, and attach the estimate
or appraisal before submitting to ASC-B&F Property and Working Capital Branch for entry into
CPAIS.

23.58 - Found Assets

Assets that are found during physical inventories or other activities must be entered into Infra by
the Infra data steward. Documentation to support the value of the asset must be submitted to
ASC-B&F for entry into CPAIS. The ASC-B&F Property and Working Capital Branch shall
create a sub-ledger for the asset only if it meets capitalization criteria and is used in Forest
Service daily operations. If the found asset is an individual asset that existed as of September 30,
2001, the asset is capitalized at $1 to comply with the business rules for the September 30, 2001,
Recorded Audit Adjustment. If the asset did not exist as of September 30, 2001, the PMO shall
coordinate with a forest engineer or appraiser to provide documentation of the fair market value
of the asset. The PM or PMO shall prepare a form FS-6500-222, Asset Valuation
Documentation, and attach the estimate or appraisal before submitting to ASC-B&F Property
and Working Capital Branch for entry into CPAIS.

23.59 - Transfers-in

Transfers-in are the non-reciprocal transfers of assets (or portions of assets) or services from
other Federal entities. The transfer value is not charged to a real property job code in FFIS. The
unit shall submit documentation to support the transfer to ASC-B&F Property and Working
Capital Branch. The ASC-B&F Property and Working Capital Branch shall prepare an entry that
updates the appropriate general ledger accounts and updates the CPAIS sub-ledger. Until FFIS
posting models for the manual entries are fully developed, transfers may be entered into CPAIS
directly if approved by management and the Department.

Capitalize the transfer of an existing constructed feature from another Federal agency when the
Forest Service assumes title to the asset. The ASC-B&F Property and Working Capital Branch
must obtain the constructed feature’s actual capitalized value as carried in the transferring
agency’s records along with the accumulated depreciation and net book value. If the transferring
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EFFECTIVE DATE: 02/03/2011                                                     Page 65 of 69
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agency is unable to provide documentation to support actual costs, fair market value at the time
of transfer to the Forest Service is used. The PMO shall work with a Forest Service engineer to
provide signed documentation of the asset value determination, or acquire an appraisal from an
independent appraiser.

Capitalize additions or improvements to existing Forest Service constructed features that are paid
by other Federal agencies only when constructed on Forest Service land, the Forest Service
retains overall control, and the work meets capitalization criteria. Capitalize the improvements
using the other agency’s actual cost.

The appropriate Infra data steward or unit contact should provide the Infra structure number for
the asset so the ASC-B&F Property and Working Capital Branch may create a sub-ledger in
CPAIS. The ASC-B&F Property and Working Capital Branch must obtain in-service date
information at the time the asset is donated to the Forest Service by reviewing the completed
form FS-6500-245, Donation/Found/Transfer-In Form for Capitalized Assets. The ASC-B&F
Property and Working Capital Branch shall create and maintain an asset folder as is done for any
other capitalized real property asset.

23.6 - Leased Assets

Federal accounting and budgetary standards require separate treatment of capital and operating
leases. The determination of whether a lease is a capital lease must be accomplished in advance
of site acquisition. This is due to the considering of budget scoring required by the Office of
Management and Budget (OMB) Circular A-11 and must be completed prior to any commitment
on the part of the Forest Service. As such, the determination and approval must be accomplished
through Washington Office Budget staff before any capital lease is made.

Units considering a capital lease for real property must work with the regional leasing officer to
ensure requirements under OMB Circular A-11 and requirements under Financial Accounting
Standards (FASB) Statement of Accounting Standards No. 13 are met.

23.7 - Maintenance and Depreciation

Maintenance activities, including preventive maintenance, are designed to keep the asset in
acceptable operating condition and in compliance with applicable laws and regulations.
Maintenance activities must not be confused with reconstruction or improvements that enlarges
the capacity of the asset, improves asset capacity by changing functionality or purpose, or
increases useful life and is not maintenance. All maintenance is expensed as an operating cost.

The Forest Service recognizes the depletion of an asset over time by identifying the useful life of
an asset and depreciating the asset using the straight line method, with no salvage value. Asset
depreciation begins as of June 30 of the year that the asset is put into service. CPAIS calculates
depreciation transactions and passes these amounts to the general ledger via interface with FFIS.
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EFFECTIVE DATE: 02/03/2011                                                       Page 66 of 69
DURATION: This amendment is effective until superseded or removed.

                      FSH 6509.19 - ASSET FINANCIAL MANAGEMENT HANDBOOK
                                    CHAPTER 20 - REAL PROPERTY


The following transactions are generated by CPAIS:

         1. AM/E2. Debit 6710 Depreciation Amortization, and Depletion; credit GL-1739
         Accumulated Depreciation on Building, Improvement, and Renovations.

         2. AM/E3. Debit 6710 Depreciation Amortization, and Depletion; credit GL-1749 Other
         Facilities Accumulated Depreciation.

         3. AM/E4. Debit 6710 Depreciation Amortization, and Depletion; credit GL-1829
         Leasehold Improvements Accumulated Depreciation.

         4. AM/E5. Debit 6710 Depreciation Amortization, and Depletion; credit GL-1719 Land
         Improvements Accumulated Depreciation.

23.8 - Disposal of Real Property

Values associated with capitalized General Property, Plant, and Equipment (GPP&E) must be
removed from the asset accounts along with associated accumulated depreciation in the period of
disposal, retirement, or removal from service, in accordance with policy in FSM 6440. If the
asset value is fully depreciated, the value must not be written off. The PMO is responsible for
managing the property disposal process. Any of the following events initiates an asset write-off
action:

         1. Destroyed by fire, flood, earthquake, and so forth.

         2. Demolished for safety or for new construction.

         3. A sale of an asset on or off National Forest System lands.

         4. Transfer out of the Forest Service inventory or relocation to another site.

         5. Taken out of service.

         6. The asset no longer maintains its identity.

         7. Road decommissioning.

The costs in the CPAIS data record must be removed from the sub-ledger through a write-off
entry in the CPAIS value stream management screen. Based on this entry, CPAIS generates
transactions that reverses the capitalized value and the accumulated depreciation of the asset and
sends the transaction to FFIS to update the general ledger. If the asset is replaced, the new asset
will have a new UAI in CPAIS.
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EFFECTIVE DATE: 02/03/2011                                                      Page 67 of 69
DURATION: This amendment is effective until superseded or removed.

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23.81 - Disposal Standards

Property disposal standards are outlined in the Federal Property Management Regulation Title
41, Code of Federal Regulations, part 101-4, and are the responsibility of the PMO. Upon
identifying the need for write-off action, the PMO or designated representative completes the
appropriate form, such as forms AD-112, Report of Unserviceable, Lost, or Damaged Property;
AD-107, Report of Transfer or Other Disposition or Construction of Property; or SF 118 Report
of Excess Real Property to document disposal of the asset. The appropriate form must be signed
by the PMO.

The following transactions are created in CPAIS upon disposal of an asset:

         1. AM/D1. Debits 7210 Losses on Disposition of Assets; credit 1711 Land and Land
         Rights.

         2. AM/D2. Debits 7210 Losses on Disposition of Assets; credits 1730 Building,
         Improvements, and Renovations.

         3. AM/D3. Debits 7210 Losses on Disposition of Asset; credits 1740 Other Structures
         and Facilities.

         4. IR/D4. Debits 7210 Loss on Disposition of Asset; credits 1820 Leasehold
         Improvements.

         5. AM/D6. Debits 1739 Building Accumulated Depreciation credits, Losses on
         Disposition of Asset.

         6. AM/D7. Debits 1749 Other Facilities Accumulated Depreciation; credits Losses on
         Disposition of Asset.

         7. AM/D8. Debits 1829 Leasehold Improvements Accumulated Depreciation; credits
         Losses on Disposition of Asset.

23.82 - Full and Partial Write-Off

A full write-off is entered into CPAIS when the entire asset is disposed. A partial write-off is
entered only for road decommissioning, when only a portion of the asset requires disposal. A
partial write-off records the partial decommissioning of a road from a pooled sub-ledger account.
Partial write-offs are not authorized for individual assets. Full and partial write-off events shall
be prepared by and entered into CPAIS by the ASC-B&F Property and Working Capital Branch
based on documentation supplied by the engineer and the PMO.
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EFFECTIVE DATE: 02/03/2011                                                       Page 68 of 69
DURATION: This amendment is effective until superseded or removed.

                      FSH 6509.19 - ASSET FINANCIAL MANAGEMENT HANDBOOK
                                    CHAPTER 20 - REAL PROPERTY


Upon decision to dispose of real property assets (full write-off), the ASC-B&F Property and
Working Capital Branch may initiate write-off in CPAIS from the Value Stream Management
Screen using the full write-off button in the top half of the screen. Support the write-off activity
by making a screen print of the Value Stream Management Screen for the asset before and after
the write-off action. (See CPAIS On-line Help for assistance in maneuvering and creating
transaction in CPAIS).

Property items still in existence when their useful life expires must not be written off. The asset
must remain in the CPAIS records as long as the asset exists and is in use. Portions of assets that
have been improved by upgrade or betterment must not be written off.

23.83 - Road Decommissioning

Road decommissioning is the demolition, dismantling, removal, obliteration, or disposal of a
deteriorated or otherwise unneeded road. The Forest Service decommissions roads when they
are no longer needed or have become damaged or lost due to acts of nature. Capitalized road
costs are written off when a road or road portion has been closed or rendered unusable.

For decommissioning roads constructed before fiscal year (FY) 1995, use the National Road
Costing Project spreadsheets to identify the construction cost per mile. If a post-FY 1994 road is
decommissioned, of the estimated value of the decommissioned road is determined by the road
engineer.

23.83a - Pre-FY 1995 Roads

The road engineer shall provide the ASC-B&F Property and Working Capital Branch with the
number of miles decommissioned and the year that those miles were constructed on form
AD-112. Form AD-112 must be signed by the PMO. ASC-B&F Property and Working Capital
Branch shall use the Road-Decommission Cost Workbook, available on the shared drive, to
determine amount of write-off. This workbook uses the same costing process developed by the
Road Costing Team, edited for each forest, to reflect its ecosystems and costs. The miles of
roads that were decommissioned during the fiscal year for each forest are identified by UAI
(generally by State) and recorded in the estimated year originally constructed. Using the Eco-
Region construction costs for local single lane native roads, the spreadsheet calculates the
estimated capitalized value to be written-off.

23.83b - Post-FY 1994 Roads

The road engineer shall provide the ASC-B&F Property and Working Capital Branch with the
number of miles decommissioned, the year that those miles were constructed and estimated value
of road on form AD-112. Form AD-112 must be signed by the PMO. The ASC-B&F Property
and Working Capital Branch shall enter the decommissioned road surface write-off in CPAIS.
Upon entry into CPAIS, the following transactions are generated and passed to the general ledger
through the CPAIS-to-FFIS interface:
WO AMENDMENT 6509.19-2011-1                                                   6509.19_20
EFFECTIVE DATE: 02/03/2011                                                    Page 69 of 69
DURATION: This amendment is effective until superseded or removed.

                      FSH 6509.19 - ASSET FINANCIAL MANAGEMENT HANDBOOK
                                    CHAPTER 20 - REAL PROPERTY


         1. AM/D5. Debits 7210 Losses on Disposition of Asset; credits 1712 Land
         Improvements.

         2. AM/D9. Debits 1719 Land Improvements Accumulated Depreciation; credits 7210
         Losses on Disposition of Asset.

24 - OTHER REAL PROPERTY

24.1 - Heritage Assets

Heritage assets are not capitalized unless the primary use is for Forest Service daily operations
and subject to the valuation, capitalization, and documentation policies and procedures described
in this chapter.

24.2 - Stewardship Assets and Land

Stewardship land and improvements to stewardship land are not capitalized and is, therefore, not
subject to the policies and procedures described in this chapter.

				
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