Archived - Reporting Guide – Annual Capital Expenditures Survey – Preliminary Estimate for 2017 and Intentions for 2018

Integrated Business Statistics Program (IBSP)

This guide is designed to assist you as you complete the Annual Capital Expenditures Survey

Preliminary Estimate for 2017 and Intentions for 2018. If you need more information, please call the Statistics Canada Help Line at the number below.

Help Line: 1-877-604-7828

Table of contents

• Reporting period information
• Definition
• Industry characteristics

Reporting period information

For the purpose of this survey, please report information for your 12 month fiscal period for which the Final day occurs on or between April 1, 2017 – March 31, 2018.

• May 1, 2016 – April 30, 2017
• June 1, 2016 – May 31, 2017
• July 1, 2016 – June 30, 2017
• August 1, 2016 – July 31, 2017
• September 1, 2016 – August 31, 2017
• October 1, 2016 – September 30, 2017
• November 1, 2016 – October 31, 2017
• December 1, 2016 – November 30, 2017
• January 1, 2017 – December 31, 2017
• February 1, 2017 – January 31, 2018
• March 1, 2017 – February 28, 2018
• April 1, 2017 – March 31, 2018

Here are other examples of fiscal periods that fall within the required dates:

• September 18, 2016 to September 15, 2017 (e.g., floating year-end)
• June 1, 2017 to December 31, 2017 (e.g., a newly opened business)

Dollar amounts

• all dollar amounts reported should be rounded to thousands of Canadian dollars (e.g., $6,555,444.00 should be rounded to $6,555);
• exclude sales tax;
• your best estimates are acceptable when precise figures are not available;
• if there are no capital expenditures, please enter '0'.

Definitions

What are Capital Expenditures?

Capital Expenditures are the gross expenditures on fixed assets for use in the operations of your organization or for lease or rent to others.

Include:

• Cost of all new buildings, engineering, machinery and equipment which normally have a life of more than one year and are charged to fixed asset accounts
• Modifications, acquisitions and major renovations
• Capital costs such as feasibility studies, architectural, legal, installation and engineering fees
• Subsidies
• Capitalized interest charges on loans with which capital projects are financed
• Work done by own labour force
• Additions to work in progress

How to Treat Leases

Include:

• assets acquired as a lessee through either a capital or financial lease;
• assets acquired for lease to others as an operating lease.

Exclude

• assets acquired for lease to others, either as a capital or financial lease.

Information for Government Departments

The following applies to government departments only:

Include

• all capital expenditures without taking into account the capitalization threshold of your department;
• Grants and/or subsidies to outside entities (e.g., municipalities, agencies, institutions or businesses) are to be excluded;
• Departments are requested to exclude from reported figures budgetary items pertaining to any departmental agency and proprietary crown corporation as they are surveyed separately;
• Federal departments are to report expenditures paid for by the department, regardless of which department awarded the contract;
• Provincial departments are to include any capital expenditures on construction (exclude outlays for land) or machinery and equipment, for use in Canada, financed from revolving funds, loans attached to revolving funds, other loans, the Consolidated Revenue Fund or special accounts.

Industry characteristics

Report the value of the projects expected to be put in place during the year. Include the gross expenditures (including subsidies) on fixed assets for use in the operations of your organization or for lease or rent to others. Include all capital costs such as feasibility studies, architectural, legal, installation and engineering fees as well as work done by your own labour force. Include all additions to work in progress.

New Assets, Renovation, Retrofit, includes both existing assets being upgraded and acquisitions of new assets

The following explanations are not applicable to government departments:

• include - Capitalized interest charges on loans with which capital projects are financed
• exclude - If you are capitalizing your leased fixed assets as a lessee in accordance with the Canadian Institute of Chartered Accountants' recommendations, please exclude the total of the capitalization of such leases during the year from capital expenditures

Purchase of Used Canadian Assets

Definition: Used fixed assets may be defined as existing buildings, structures or machinery and equipment which have been previously used by another organization in Canada that you have acquired during the time period being reported on this questionnaire.

Explanation: The objective of our survey is to measure gross annual new acquisitions to fixed assets separately from the acquisition of gross annual used fixed assets in the Canadian economy as a whole.

Hence, the acquisition of a used fixed Canadian asset should be reported separately since such acquisitions would not change the aggregates of our domestic inventory of fixed assets, it would simply mean a transfer of assets within Canada from one organization to another.

Imports of used assets, on the other hand, should be included with the new assets (Column 1) because they are newly acquired for the Canadian economy.

Work in Progress

Work in progress represents accumulated costs since the start of capital projects which are intended to be capitalized upon completion.

Typically capital investment includes any expenditure on an asset in which its' life is greater than one year. Capital items charged to operating expenses are defined as expenditures which could have been capitalized as part of the fixed assets, but for various reasons, have been charged to current expenses.

Land

Capital expenditures for land should include all costs associated with the purchase of the land that are not amortized or depreciated.

Residential Construction

Report the value of residential structures including the housing portion of multi-purpose projects and of townsites with the following Exceptions:

• buildings that have accommodation units without self-contained or exclusive use of bathroom and kitchen facilities (e.g., some student and senior citizen residences)
• the non-residential portion of multi-purpose projects and of townsites
• associated expenditures on services

The exceptions should be included in the appropriate construction (e.g., non-residential) asset.

Non-Residential Building Construction (excluding land purchase and residential construction)

Report the total cost incurred during the year of building and engineering construction (contract and by own employees) whether for your own use or rent to others. Include also:

• the cost of demolition of buildings, land servicing and of site-preparation
• leasehold and land improvements
• townsite facilities, such as streets, sewers, stores, schools

Non-residential engineering construction

Report the total cost incurred during the year of engineering construction (contract and by own employees) whether for your own use or rent to others. Include also:

• the cost of demolition of buildings, land servicing and of site-preparation
• oil or gas pipelines, including pipe and installation costs
• all preconstruction planning and design costs such as engineer and consulting fees and any materials supplied to construction contractors for installation, etc.
• communication engineering, including transmission support structures, cables and lines, etc.
• electric power engineering, including wind and solar plants, nuclear production plants, power distribution networks, etc.

Machinery and Equipment

Report total cost incurred during the year of all new machinery, whether for your own use or for lease or rent to others. Any capitalized tooling should also be included. Include progress payments paid out before delivery in the year in which such payments are made. Receipts from the sale of your own fixed assets or allowance for scrap or trade-in should not be deducted from your total capital expenditures. Any balance owing or holdbacks should be reported in the year the cost is incurred.

Include:

• automobiles, trucks, professional and scientific equipment, office and store furniture and appliances
• computers (hardware and software), broadcasting, telecommunication and other information and communication technology equipment
• motors, generators, transformers
• any capitalized tooling expenses
• progress payments paid out before delivery in the year in which such payments are made
• any balance owing or holdbacks should be reported in the year the cost is incurred

Software

Capital expenditures for software should include all costs associated with the purchase of software.

Include:

• Pre-packaged software
• Custom software developed in-house/own account
• Custom software design and development, contracted out

Research and Development

Research and experimental development (R&D) comprise creative and systematic work undertaken in order to increase the stock of knowledge – including knowledge of humankind, culture and society – and to devise new applications of available knowledge.

For an activity to be an R&D activity, it must satisfy five core criteria:

1. To be aimed at new findings (novel);
2. To be based on original, not obvious, concepts and hypothesis (creative);
3. To be uncertain about the final outcome (uncertainty);
4. To be planned and budgeted (systematic);
5. To lead to results to could be possibly reproduced (transferable/ or reproducible).

The term R&D covers three types of activity: basic research, applied research and experimental development. Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any particular application or use in view. Applied research is original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily towards a specific, practical aim or objective. Experimental development is systematic work, drawing on knowledge gained from research and practical experience and producing additional knowledge, which is directed to producing new products or processes or to improving existing products or processes.