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previously subject to a use allowance, the annual depreciation charge thereon may not exceed the <br />amount that would have resulted had the depreciation method been in effect from the date of <br />acquisition of the asset. The combination of use allowances and depreciation applicable to the <br />asset shall not exceed the total acquisition cost of the asset or fair market value at time of <br />donation. <br />e. When the depreciation method is used for buildings, a building's shell may be segregated from <br />the major component of the building (e.g., plumbing system, heating, and air conditioning <br />system, etc.) and each major component depreciated over its estimated useful life, or the entire <br />building (i.e., the shell and all components) may be treated as a single asset and depreciated over <br />a single useful life. <br />f. Where the use allowance method is followed, the use allowance for buildings and <br />improvements (including land improvements, such as paved parking areas, fences, and <br />sidewalks) will be computed at an annual rate not exceeding two percent of acquisition costs. <br />The use allowance for equipment will be computed at an annual rate not exceeding 6 2/3 percent <br />of acquisition cost. When the use allowance method is used for buildings, the entire building <br />must be treated as a single asset; the building's components (e.g., plumbing system, heating and <br />air condition, etc.) cannot be segregated from the building's shell. <br />The two percent limitation, however, need not be applied to equipment which is merely attached <br />or fastened to the building but not permanently fixed to it and which is used as furnishings or <br />decorations or for specialized purposes (e.g., dentist chairs and dental treatment units, counters, <br />laboratory benches bolted to the floor, dishwashers, modular furniture, carpeting, etc.). Such <br />equipment will be considered as not being permanently fixed to the building if it can be removed <br />without the destruction of, or need for costly or extensive alterations or repairs, to the building or <br />the equipment. Equipment that meets these criteria will be subject to the 6 2/3 percent equipment <br />use allowance limitation. <br />g. A reasonable use allowance may be negotiated for any assets that are considered to be fully <br />depreciated, after taking into consideration the amount of depreciation previously charged to the <br />government, the estimated useful life remaining at the time of negotiation, the effect of any <br />increased maintenance charges, decreased efficiency due to age, and any other factors pertinent <br />to the utilization of the asset for the purpose contemplated. <br />h. Charges for use allowances or depreciation must be supported by adequate property records. <br />Physical inventories must be taken at least once every two years (a statistical sampling approach <br />is acceptable) to ensure that assets exist, and are in use. Governmental units will manage <br />equipment in accordance with State laws and procedures. When the depreciation method is <br />followed, depreciation records indicating the amount of depreciation taken each period must also <br />be maintained. <br />12. Donations and contributions. <br />a. Contributions or donations rendered. Contributions or donations, including cash, property, <br />and services, made by the governmental unit, regardless of the recipient, are unallowable. <br />24 <br /> <br />