Fixed assets are:
Physical property with an acquisition value of $5,000 or more and a useful life expectancy (UEL) of more than one year.
Fabricated equipment, which has an aggregate value of $5,000 or more and a UEL of more than one year.
A collection of purchases which have an aggregate value of $5,000 or more which is to be used over the same period of time (more than one year) e.g. library books.
Acquisitions
Finance will identify assets which meet the threshold for capitalization through month end invoice review and record these on the Fixed Asset Register. A representative from the Finance Team will reach out to you, if needed, to gain clarification as to whether an asset a purchased item meets the definition of a Fixed Asset.
If an item you have acquired is identified as a Fixed Asset, Finance will update your Jira Request for Payment (RFP) to note that it is a Fixed Asset. Finance will reach out via email with additional information on how to tag your asset.
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Once Finance has identified that an item meets the definition of a Fixed Asset, Finance will enter it into the Fixed Asset Register and assign it a Tag Numbertag number. A physical tag will be sent via internal mail to the Requestor. This tag must be attached to the asset.
In the case where multiple items comprise the Fixed Asset, the tag should be attached to the highest value individual item and a description of where the items are should be maintained locally.
For library books and computer equipment managed by CIS, no tag will be assigned, as local procedures to track items are already in place.
Accounting for Fixed Assets
Fixed Assets are At the University level, capital equipment is not expensed at the time of purchase and will instead be recognized as a Fixed Asset over its UEL (capitalized). At a department level, the item will still be recognized as an expense at the time of purchase.
Depreciation will be expensed annually based on an Assets' UEL:
Asset Category | Useful Life (years) | Description |
|---|---|---|
Buildings | 30 | Physical structure owned by the University |
Building Improvements | 30 | Permanent improvements made to buildings owned by the University |
Right-of-Use Lease Asset / Liability | Lease Term | Ensure any lease signed (including, but not limited to buildings, equipment, machinery, etc.) is sent to generalledger@spu.edu. Recent accounting pronouncements impose additional reporting requirements. The GL Team will need all lease information available. |
Machinery & Equipment | 10 | Devices, audiovisual, computers, machines, equipment meeting the definition of a Fixed Asset. |
Vehicles | 10 | Cars, motorized carts, or any other vehicle meeting the definition of a Fixed Asset (bought or leased). |
Library Books | 20 | Any purchase of a set of library books meeting the definition of a Fixed Asset. |
Furniture & Fixtures | 10 | Furnishings such as seats, couches, desks, tables, whiteboards, display sets, etc. whose cumulative purchase meeting the definition of a Fixed Asset. |
Musical Instruments | 10 | Any musical instruments bought and owned by the University meeting the definition of a Fixed Asset. |
Artwork | Not depreciated | Pursuant to ASC 958-360-35-3, artwork need not be capitalized, and an election is available to treat as artwork fixed assets similar to land. |
Land | Not depreciated. | Land as recorded as a Fixed Asset but is not depreciated. |
Disposals
Finance must be notified before an asset is sold/disposed.
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Asset Inventory Count
Fixed Asset records are verified at least once every two years to ensure that the inventory records within the asset management system are accurate.Asset Tagging
An imperative control over fixed assets is physical tagging of any depreciable assets meeting the $5,000 dollar value threshold belonging to any category of property, plant & equipment. Each month, when the GL Accounting team prepares the reclass journal entry to move the expensed invoice balance to the appropriate fixed asset account, the requestor from the RFP will receive an email from General Accounting to affix a physical tag to the asset to be tracked centrally on the fixed asset schedule maintained by the GL Accounting team.
It will be the responsibility of the department requesting payment for the asset to maintain physical control of the asset and its tag.
Useful Life Schedule
Refer to the Useful Life schedule below:
The responsibility on a purchaser is to include the invoice and description of the asset on the RFP submitted to Accounts Payable so that the GL Accounting team can capitalize the assets and depreciate them appropriately according to their Useful Life.
Note that these purchases will not be expensed at the point of purchase, but over the useful lives of the assets
The Finance Team will send a copy of relevant sections of the Fixed Asset Register to each department responsible for any Fixed Assets every two years. The department must physically verify all items listed on the Fixed Asset Register.
Inform Finance of any items which cannot be located.