Standard Operating Procedures

SUBJECT: Transfer Title from Federal or Other Owned
SOURCE: Capital Asset Management, Office of the Treasurer
ORIGINAL DATE OF ISSUE: September 9, 2005
DATE OF
LAST REVISION
March 5, 2008
CSOP NO: 17.0
RATIONALE: Transfer of Title for equipment purchased with monies designated as federally owned or other owned.
CSOP: Federally owned and other owned assets are created in the university's asset database for inventory tracking purposes.

When the title to equipment remains vested in the Federal Government, State of Indiana, or other external institutions the equipment is considered federal or other owned.

Federal and other owned assets are currently not depreciated and are not included on the university's financial statements. These assets may later be capitalized and subject to depreciation if title to the equipment or software is subsequently transferred to the university.

Federally and other owned assets are identified by a specific set of object codes:
Object Code Description
7031 CAPITAL EQUIPMENT FED OWNED
7036 COMPUTER EQUIP FED OWNED
7731 TRANSFERS-IN FED OWNED
7032 CAP EQUIP-NON IU OR FED OWN
7531 FAB EQUIP-UNIV CONST FED OWNED
7532 CAP EQUIP-UNIV CONST NON IU OR FED OWN

Contract and Grant Administration reviews new purchases to ensure the correct object codes are assigned.

At the termination of the award, grant, or contract, Contract and Grant Administration will contact the granting agency to inquire if the title will transfer to IU, or if the equipment will be returned to the Federal Agency, State of Indiana, or other external institution.

Procedures:

  1. Equipment returned to Federal Agency, State of Indiana, or other external institutions
  2. Transfer Title from federally owned, and other owned to Indiana University
  1. Equipment returned to Federal Agency, State of Indiana, or other external institutions

    If title is not relinquished to the university, the granting agency or owner of the asset will forward a letter designating where the equipment is to be shipped. This information is sent to the university organization holding the equipment. The organization has the responsibility of shipping the equipment to its new destination, and initiating an Asset Retirement Document.

    Procedures:
    1. Once the equipment has left the university the organization must initiate an Asset Retirement Document using the retirement reason of "External Transfer".
    2. The Asset Retirement Document will require the name of the institution or non-profit agency the equipment will be returned to when the award, grant or contract is terminated.

    For information on how to process an Asset Retirement reference the CAMS: Asset Retirement training document.

  2. Transfer Title from federally owned, and other owned to Indiana University

    Procedures:

    If the title is relinquished to the university then the title is transferred to Indiana University, as stated below:
    1. When title is transferred to Indiana University Contract and Grant Administration will notify the University Capital Asset Office that the title has been transferred.
    2. To record the relinquishment of title in the university asset database the federal or other owned asset will be retired. A new asset will be created to record the transfer in of the asset to the university's inventory.

    Retirement:
    1. Upon notification of the title transfer the University Capital Asset Office will retire the asset with a retirement reason of "Title Transfer".
    2. The University Capital Asset Office will ensure the government tag is removed from the equipment.
    3. If the book value or fair market value is below the capitalization threshold the University Capital Asset Office will require that the organization remove the university's tag (yellow bar code label).

    Create New Asset:
    1. Before a new asset is created the University Capital Asset Office will contact the organization to determine if the asset has a remaining useful life. If the asset is determined to be of no value a new asset will not be created, and the asset should be disposed of in accordance with purchasing disposition policy. This will require a retirement document to be issued by the organization. (See FIN-PUR-14.0 Disposal and Redistribution of University Property.)
    2. If the asset does have a remaining useful life the asset will be created as a transfer in to the university.

      Generally the acquisition value of a transfer-in should be based on the fair market value of the asset. Due to the difficulty of determining the fair market value of assets, the University Capital Asset Office will use book value of the asset(s). The book value will be calculated using the original acquisition date and the useful life assigned to the asset.

      If the organization chooses to they can supply the University Capital Asset Office with the fair market value for the asset(s). The organization will be required to supply supporting documentation for the fair market value. Fair market value for assets can be determined by references to the realizable value of similar assets that are sold for cash, quoted market prices, or independent appraisals.1
      • If the book value or the fair market value meets the university's capitalization threshold a capital asset will be created.
      • If the book value or the fair market value is below the university's capitalization threshold a non-capital asset will be created.

    3. The University Capital Asset Office will initiate the Add Asset Document to create the capital or non-capital asset and record the title transfer to Indiana University.
      • The University Capital Asset Office will contact the organization to get the departmental account number that should be used to create the asset.
      • The original account number will be entered in the org type field, and the original asset number in the organization text field to create an audit history.
      • On the Add Asset Document a capital or expendable equipment object code will be used that denotes the addition is from a title transfer.
      • On the Add Asset Document the acquisition type must be set to "S" Cptl transfer-in Federally/Other Owned

        Title Transfer Object Codes:
        Object Code Description
        7702 CAPITAL EQUIPMENT TITLE TRANSFER
        7715 CAPITAL COMPUTER EQUIP TITLE TRANSFER
        5201 EXPENDABLE EQUIPMENT TITLE TRANSFER

        General Ledger Entries generated by the Add Asset Document for a capital addition title transfer:

        The ledger entries are created based on the acquisition type code "S" Cptl transfer-in Federally/Other Owned.

        The following is an example of the ledger entries that will be generated from the initiation of the Add Asset Document with an acquisition type of "S" Cptl transfer-in Federally/Other Owned.

        Add Asset Document Payment Example:
        Account Object Code Object Code Description Amount
        1912610 7702 CAPITAL EQUIPMENT TITLE TRANSFER $5,000.00

        General Leger Entry Example:
        Account Object Code Object Code Description Debit Credit
        1912610 7702 CAPITAL EQUIPMENT TITLE TRANSFER $5,000.00  
        1912610 1185 Cptl transfer-in Federally/Other Owned   $5,000.00
        9510092 8610 CAPITAL EQUIPMENT $5,000.00  
        9510092 9899 FUND BALANCE   $5,000.00

        The only information supplied on the Add Asset Document was account 1912610, object code 7702, and the amount $5,000.00. The remaining entries were generated by the Add Asset Document and the capitalization process.

        A non-capital addition will not generate any general ledger entries.
DEFINITIONS: Capital Assets must have an acquisition value of at least $5,000 and a useful life expectancy of one year or more.

Equipment - The term "equipment" includes delivery equipment, office equipment, machinery, furniture and fixtures, factory equipment and similar fixed assets.

Fair Market Value - The Fair Market Value (FMV) is the price that a willing buyer would pay to a willing seller, in a free market, for an asset or any piece of property.2

Federally owned equipment - Federally owned equipment is defined as assets that utilize a contract and grant account for the purchase, indicating the federal government or agency will retain ownership upon the completion of the grant or contract.
CROSS REFERENCE: CSOP 2.0 Asset Retirement
CSOP 8.0 Capitalization of Moveable Equipment
RESPONSIBLE ORGANIZATION: Office of the Treasurer

1APB-29, par.25, Accounting for Nonmonetary Transactions
2Reference from Wikipedia