|SUBJECT:||Transfer-in Capital Assets|
|SOURCE:||Capital Asset Management, Office of the Treasurer|
|ORIGINAL DATE OF ISSUE:||June 2010|
|RATIONALE:||To provide guidelines for the capitalization of assets transferred in from other universities or government surplus|
|CSOP:||Whether an organization receives equipment through a transfer from another institution or from government surplus, the equipment list should be sent to the University Capital Asset Office at email@example.com.
The University Capital Asset Office will initiate the add asset documents to create the assets that meet the capitalization criteria.
Most of the information needed to create the assets will be supplied by the transferring institution on the equipment list.
The equipment list should have the following information:
If the organization chooses, they can supply the University Capital Asset Office with the fair market value of the asset(s). The organization will be required to supply supporting documentation if the fair market value is given. The fair market value can be determined by references to the realizable value of similar assets that are sold for cash, quoted market prices, or independent appraisals.1
On the add asset document for Transfer-in equipment, the University Capital Asset Office will enter the Account Number, Object Code and Net Book Value or the Fair Market Value of the equipment based on information supplied from the receiving organization.
The accounting entries are then created based on the financial information entered into the payment section of the add asset document. The account will see offsetting entries to the expense object code 7700 and to income object code 1175 for the value of the item. The entries offset, having no effect on Cash or Fund Balance.
Transaction entered on the add an asset document:
Transaction Generated by the add an asset document:
The only information supplied in this example on the add asset document were Account 1270000, Object Code 7700 and a Fair Market Value of $6,500.00. The remaining entries were generated by the Add an Asset Document and the Capitalization Process.
|DEFINITIONS:||Capital Assets must have an acquisition value of at least $5,000 and a useful life expectancy of one year or greater.
Equipment - The term "equipment" includes delivery equipment, office equipment, machinery, furniture and fixtures, factory equipment and similar fixed assets.
Transfer-in capital assets are those received from an external organization (usually another university) or government surplus.
Equipment List - The equipment list is a listing of the equipment received from the transferring institution.
Receiving Organization - The Indiana University organization that received the equipment.
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
Net realizable value - The realizable value (NRV) is a method of evaluating an asset's worth when held in inventory, in the field of accounting. NRV is part of the Generally Accepted Accounting Principles and International Financial Reporting Standards (IFRS) that apply to valuing inventory, so as to not overstate or understate the value of inventory goods. Net realizable value is generally equal to the selling price of the inventory goods less the selling costs (completion and disposal).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 4.0 Physical Inventories
CSOP 8.0 Capitalization of Moveable Equipment
Accounting Administration Policy FIN-ACC-I-150 Capitalization of Moveable Equipment
|RESPONSIBLE ORGANIZATION:||Financial Management Services, Office of the Treasurer|