||When assets are no longer needed by an organization, the department should first see if the asset can be used by another organization within Indiana University. The purchasing redistribution list is used to advertise surplus assets to other university organizations. Messages to the redistribution list can be sent using the following form: http://www.indiana.edu/~blpur/forms/redistribution.shtml
Assets that do find a home in another organization must be transferred to the receiving organization using the KFS Asset Transfer Document.
For information on how to transfer an asset please refer to the asset transfer training document at the following url: https://fms.iu.edu/training/kuali-financial-system/.
If it is determined that there is no need for the asset and the asset is not viable for sale by Purchasing, the asset must be retired using the Asset Retirement Document in KFS. Timely transactions are important to the university to protect us from an unfavorable audit finding. For this reason the retirement document must be processed within thirty days of the asset leaving the organization.
An Asset Retirement Document should only be issued when the equipment is removed from the organization or the asset has been cannibalized. Fully depreciated assets must remain on the inventory until the equipment is physically disposed.
Any time an asset is retired within one year of purchase, a note must be added to the retirement document that explains why a new asset is being retired.
Retirement of Gift Assets
IU must report information to the IRS about dispositions of charitable donation property made within two years after the donor contributed the property. When a gift asset is retired within two years of the creation date an IRS Form 8282 Donee Information Return must be processed. Each quarter the University Capital Asset Office will run an asset retirement report to analyze retirements. Any gift assets retired within two years will be reported to IUF Gift Administration. Upon notification, the IU Foundation will complete the IRS Form 8282, send a copy to the IRS and to the donor.
For information on how to retire an asset please refer to the asset retirement training document at the following url: https://fms.iu.edu/training/kuali-financial-system/
- The Asset Retirement Documents will route to the Fiscal Officer for approval.
- If the retirement reason is Sold or Gift the document will be routed to the Campus Purchasing Organization for approval.
- If the retirement reason is External Transfer the document will be routed to the account supervisor for approval.
- The University Capital Asset Office will be the final approval for all retirement documents.
Processing the Asset Retirement
East, Northwest, South Bend, Southeast
For the campuses listed above the Campus Capital Asset Office representative will issue the Asset Retirement Document. The organization can send an e-mail to the Campus Capital Asset Office representative that a retirement of an asset has occurred. The note should include the asset or tag number, and the reason the asset is being retired.
Kokomo requires the organization to complete a "Capital Equipment Transaction form." This form can be acquired by contacting Dave Hawkins.
For the Bloomington and Indianapolis campus the Asset Retirement Documents are issued by the Organization.
The following are retirement reasons and the procedures for each type of retirement:
- External Transfer
The Auction retirement reason is used when the Surplus or Purchasing organization arranges the sale of the equipment, or when an asset was sent to surplus and an Asset Transfer Document was not issued within thirty days.
A note must be added to the retirement document that denotes that an asset transfer document was not issued. The note should include an approximate date the asset was sent to surplus. If it is not clear if the asset was sent to surplus, it should be retired as lost.
Bloomington, East, IUPUI, Kokomo, and Southeast
The Organization will contact IU Surplus Stores at IUB or IUPUI to determine if surplus assets can be sold through their facility. When assets are sent to Surplus Stores at IU Bloomington or IUPUI, the sending organization, or Campus Capital Asset Representative must transfer the capital assets to the surplus department using the KFS asset transfer document.
See CSOP 3.0 Asset Transfer
Northwest, South Bend For the Northwest and South Bend Campuses contact the campus purchasing department for disposition of surplus equipment. When assets are sold by purchasing the asset should be retired using the retirement reason of auction.
Use retirement reason code 5 for Cannibalized when an asset is dismantled and used for parts. The asset should be dismantled before the asset is retired. This will protect your organization from an unacceptable audit finding for an asset found (active) in inventory that has been retired. When assets are cannibalized it is important to remove the tag number to ensure a part with a tag is not added to an existing capital asset with its own tag. A note should be added to the retirement document that confirms the tag number has been removed.
Some parts may qualify as “post-cannibalization” assets. If the book value of the asset at the time of retirement is >=$5000, the fair market value of each part should be evaluated. Parts can be classified in 3 types; Spare replacement, Upgrade or Stand-alone (in production).
Spare replacement parts (hot spares) are not put into production until needed and therefore do not need to be further evaluated as possible assets.
For the part to be considered an upgrade, the part would need to be installed on capital equipment and the installation of the part will do one of the following:
- add a substantial increase in the functionally of the equipment which allows it to function or perform tasks it was previously incapable of performing.
- add a substantial increase in the efficiency of the equipment, that is, an increase in the level of service provided by the equipment without the ability to perform additional tasks.
- extend the estimated useful life of the equipment.
If the installation of the part is an upgrade, on the retirement document, the initiator will need to list the original cost of the part in the document notes, and the asset number the part will be installed on. If the original cost is unknown, the organization may provide the fair market value.
If the organization chooses to supply the University Capital Asset Office with the fair market value for the part; 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
In accordance with Generally Accepted Accounting Principles (GAAP) the University Capital Asset Office will do a cost basis adjustment to the cost of the asset the part will be installed on. Using the part’s original cost or fair market value, the University Capital Asset Office will determine the book value of the part. When it has been determined that the book value is $5,000 or more, the cost will be added to the target asset (upgraded asset). The University Capital Asset Office will accomplish this by creating a “found” asset using the book value of the part, and a create date set from today’s date. The found asset will then be merged into the target asset.
Stand-alone assets can function apart from the original cannibalized asset and are expected to be put into production immediately after separation. Similarly, these assets will be created using the “found” method.
Use retirement reason 8 for Destroyed when the asset was unexpectedly destroyed.
When issuing the asset retirement use retirement reason 4 for Discarded. When assets are not considered viable for sale by Purchasing, and there are no environmental concerns, they should be disposed of in the normal Building Services process. When assets are disposed of the tag number should be removed. This would include yellow capital tags, and white non-capital tags.
Examples of environmental concerns or hazardous items include: televisions, office machines, computers, computer monitors, and freezers. (This list is not meant to be all inclusive but rather to provide examples of some of the more common hazardous items.)
Reference (Indiana University Knowledge Base, How can I minimize my computer's impact on the environment?) URL: http://kb.iu.edu/data/erth.html
If the asset(s) is too large, too numerous, or hazardous, the organization can contact the department listed below to dispose of the asset:
- Bloomington, Physical Plant, 812-855-8728
- Indianapolis, Surplus, 317-278-1707
- East, Physical Plant, 765-973-8254
- Kokomo, Physical Plant, 765-455-9393
- Northwest Physical Plant, 219-980-6710
- South Bend Support Services, 574-520-4250
- Southeast, Physical Plant, 812-941-2330
Retirement reason 9 for External Transfer will require the name of the institution that will receive the asset.
Indiana University may allow faculty members transferring from the university to take equipment purchased from their grant and contract funds with them so long as they are transferring to another educational institution or nonprofit organization, and so long as they receive approval of their department chairperson, school dean, appropriate campus research office, and the Assistant Vice President of the Research and University Graduate School. These approvals need to be acquired before the retirement document is initiated.
Research equipment purchased from external funds is normally considered special purpose due to the uniqueness of the project director’s research.
The asset will be retired from IU as an External Transfer to the new institution.
External Transfer Retirements are approved by the fiscal officer and the account supervisor.
Transfer of equipment purchased with University funds can be accomplished only with reimbursement to the University. All assets purchased with University funds will be priced by the Purchasing department at the greater of the net book value or the fair market value. In this case the appropriate retirement reason would be Sold (see #8 Sold) and not External Transfer.
With approval from Purchasing or the property designee for the campus, surplus assets may be gifted to not-for profit organizations. The following conditions should be documented before gifting any assets.
A retirement reason 6 for Gift will require the name of the institution that will receive the asset.
- The asset has no utility for the university.
- The asset has no appreciable market value for resale
Use retirement reason code of 3 for Lost. Assets should only be retired as lost after every effort has been made to locate the asset. A note should be added to the retirement document that provides details as to the search that was performed. Upon review, the University Capital Asset Office may contact the organization for more information.
Once an asset is retired it can only be reactivated by the University Capital Asset Office using the net book value (NBV). The net book value is calculated using the original acquisition date, original cost and the useful life assigned to the asset and is the difference between the original cost and the accumulated depreciation. When the NBV is under the capitalization threshold the asset cannot be reactivated.
The sale of assets is managed under the authority of the Purchasing department or the property designee for the campus. On occasion an organization may work directly with Purchasing to arrange a sale of assets. Use the Sold retirement reason when arrangements are made with the Purchasing Department to sell assets outside of the campus surplus process.
The sold retirement reason will require the buying institution or individual's name, as well as the selling price.
When issuing the asset retirement document, use retirement reason code of 1 for Sold.
When assets are stolen a report must be filed with the IU Police Department.
When capital assets are retired with a retirement reason of 7 for Theft the retirement document will require an IUPD case number.
Once the department and Purchasing have determined that existing assets will be traded in on a purchase order, it is important the asset(s) given up in trade be retired. The retirement should be processed when the equipment is turned over to the vendor. The timeliness of the retirement is important because this will affect the book value of the asset given in trade.
When issuing the asset retirement document, the correct retirement reason code to use is 2 for Trade-in. A note needs to be included that will inform the Capital Asset Office of the purchase order from which the new asset is being purchased.
Please note: If an asset is released to the vendor and no trade-in allowance (cost reduction) has been received, the asset retirement reason should be 4 for Discarded.
See CSOP 10.0 Trade-in of Similar Capital Equipment
Other types of retirements (i.e., credits, assets created in error) are processed by the University Capital Asset Office.