Fixed Asset Capitalization Procedure

Effective Date:

September 1, 2014

Function:

Fixed Asset Management

Contact:

Dave Martin

Basis for Procedure

This document describes the procedure for capitalizing and depreciating Research Foundation (RF) assets. The RF maintains accurate and complete records of property, plant, and equipment held and capitalizes and depreciates them according to appropriate accounting, tax, and regulatory requirements. Once an asset's cost is capitalized, it will be depreciated, in a systematic manner over the useful life of the asset. All operating locations shall establish an internal control structure over fixed assets that provide reasonable assurance of effective and efficient operations, reliable financial reporting, and compliance with applicable laws and regulations.

Procedure Summary

Operating locations must add property records to Real Asset Management Information (RAMI) system in accordance with procedure Adding Property Records to RAMI. The property records must be entered in to Real Asset Management Inventory (RAMI) property system within 60 days of the asset placed in service. If additional time is needed, campus staff must contact RF Central Office Finance staff.

Each month the Finance Office will review additions to RAMI and will capitalize assets based on the award purpose in RAMI, as well as the economic development or research infrastructure classification. See the Award Purpose Capitalization Matrix for award purpose codes used to determine capitalized assets. See the Economic Development or Research Infrastructure section below for more information on Economic Development and Research Infrastructure related assets.

For more information related to defining the criteria for capitalizing RF assets please refer to the RF Capitalization Policy.

Asset Depreciation Methods

Depreciation is the process of allocating the cost of tangible property over a period of time. All capitalized assets should be depreciated using the straight-line method over the useful life of the asset class. An asset's life is the period of time over which services are expected to be rendered by the asset.

Depreciation is calculated based on the capitalized costs of the asset spread over the useful life of the asset. Depreciation of capitalized assets will commence in the month and year the asset is placed into service or use. The annual depreciation expense will be charged in the general ledger to the appropriate Fixed Asset classification.

Building and Building Components

Description

Depreciation Method

Useful Life

General Construction

Straight Line

50

Site Preparation

Straight Line

unlimited

Roof

Straight Line

25

Interior Construction

Straight Line

30

Plumbing

Straight Line

30

HVAC

Straight Line

30

Electrical

Straight Line

30

Fire Protection

Straight Line

25

Elevators

Straight Line

25

Asbestos/Environmental Removal

Straight Line

30

Miscellaneous

Straight Line

25

Equipment and Other Assets

Class Code

Description

Depreciation Method

Useful Life

0XXXXX

M&O Equipment

Straight Line

13

1XXXXX

Food Service

Straight Line

11

2XXXXX

Auto/Vehicle

Straight Line

6

3XXXXX

Furniture

Straight Line

15

40XXXX

General Office Equipment

Straight Line

7

41XXXX

Printing & Related

Straight Line

10

42XXXX

Electronic Data Processing

Straight Line

5

43XXXX

Telecomm Equipment

Straight Line

5

5XXXXX

Audio/Visual

Straight Line

10

6XXXXX

Phys Ed/Rec

Straight Line

6

7XXXXX

Music Instr/Equipment

Straight Line

15

80XXXX

Lab Equipment

Straight Line

13

81XXXX

Chemistry Equipment

Straight Line

11

82XXXX

Physics Equipment

Straight Line

6

83XXXX

Instrumentation

Straight Line

13

84XXXX

General Lab Support

Straight Line

6

85XXXX

Arts & Crafts

Straight Line

7

9XXXXX

Hospital Furniture & Equip

Straight Line

8

951200

Nanotech Equipment

Straight Line

5

980100

Intangible Assets

Straight Line

Typically 5 but may vary

980200

Equipment in Progress

Straight Line

To be determined

Equipment in Progress

Assets which are purchased over time and/or are developed on campus and placed in service at a later time should be classified with the asset class code of 980200 (Equipment in Progress) prior to them being placed into service. This class code will help track the costs of the assets but will defer the capitalization until it is placed into service. Equipment in Progress assets are rare and are normally very expensive assets that are being developed on campus. The process for tracking equipment in progress is as follows:

When initial parts are purchased:

1) Assign an asset number for the tool and add it to RAMI for the original cost

2) The class code 980200 (Construction in Progress) should be used

3) The date capitalized and the date purchased fields in Real Asset should have a date out in the future (at least a year or two beyond when completion is expected) Input all other RAMI fields as normal.

When additional parts for the asset are purchased:
1) Update the cost of the asset in RAMI to add the cost of additional parts that were purchased

When asset is placed in service:

1) Change the class code of the asset in RAMI and assign proper class code which will dictate the useful life of the asset

2) Change the Date Capitalized and Date Purchased fields of the asset in RAMI to the date that the asset was placed in service

Economic Development or Research Infrastructure

For awards related to economic development or research infrastructure, end users should utilize the descriptive flex field in award establishment indicating this activity. This field is not required and defaults to "No" for federal or federal flow through grants and other award purposes that would not potentially be related to this type of activity.

What is a research supported economic development or infrastructure award?

Generally, these specific sponsors provide support for economic development or infrastructure:

Related Information:

RF Capitalization Policy

Adding Property Records to RAMI

Award Purpose Capitalization Matrix

Change History

Date

Change History

September 1, 2014

Updated references from PCS to RAMI; added language related to capitalization of economic development and research infrastructure assets and equipment in progress; removed language noting that RF does not capitalize equipment purchased on S&F awards.

May 4, 2010

Added note that assets must be entered into PCS within 90 days.

June 15, 2007

New document.

 

 

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