CSOP 40.0 Transfer-in of Capital Assets from Non-IU Institutions

SUBJECT:

Transfer-in of Capital Assets from Non-IU Institutions

SOURCE:

Capital Asset Management

ORIGINAL DATE

OF ISSUE:

June 2010

DATE OF

LAST REVISION:

October 2015

CSOP NO:

40.0

RATIONALE:

To provide guidelines for the capitalization of assets transferred in from other universities or government surplus (non-IU).

CSOP:

Whether an organization receives equipment through a transfer from another institution or from government surplus, the equipment list should be sent to Capital Asset Management at capasset@iu.edu.

Capital Asset Management 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:

  • quantity
  • vendor
  • manufacturer
  • asset description
  • serial number
  • original acquisition date
  • original cost

The following additional information will be needed from the receiving organization in order to create the assets:

  • transferring institution
  • account number, this should be an active operating account
  • fair market value (optional)
  • date the equipment was received by IU
  • campus, building and room

Generally, the acquisition value of a transfer-in should be based on the fair market value of the asset. However due to the difficulty of determining the fair market value of assets, the book value is used if the fair market value is not provided. The 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.

If the organization chooses, they can supply Capital Asset Management 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.

 

Transfer-in of university owned assets

Transfer-in of federal or other owned assets

Capitalization entries for Transfer-in Equipment

 

Transfer-in of university owned assets
A transfer-in of a university funded asset(s) will be assigned an acquisition type of T for transfer-in. The expense object code for this type of transfer-in will be set to 7700 for gift.

 

Transfer-in of federal or other owned assets
If the transfer-in assets are federal or other owned, the acquisition type will be set to "S" Capital Transfer-in Federal/Other Owned. The expense object code will be set to 7731.

 
Capitalization entries for Transfer-in Equipment
On the add asset document, Capital Asset Management will enter the account number, object code and the appropriate value of the asset based on information supplied from the equipment list.

The accounting entries are then created based on the financial information entered into the payment section of the add asset document
Transaction entered on the Add Asset document:

Account Number Object Code Description DR CR
12-700-00 7700 Gifts of Capital Equipment 6,500  


 Transaction Generated by the Add Asset document:

Account Number Object Code Description DR CR
12-700-00 1175 Capital Equipment Gift   6,500


Capitalization Process:

Account Number Object Code Description DR CR
95-700-74 8610 Capital Equipment 6,500  
95-700-74 9899 Fund Balance   6,500


The only information entered on the add asset document was account 1270000, object code 7700 and asset value of $6,500.00. The remaining entries were generated by the add asset document and the capitalization process.

DEFINITIONS:

Capital equipment- must have an acquisition value of at least $5,000 and a useful life expectancy of one year or more.

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

Equipment list-  a listing of the equipment received from the transferring institution

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

Federally owned equipment- 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.

Net realizable value (NRV)- 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).

Receiving organization- the Indiana University organization that received the equipment.

Transfer-in capital assets- assets received from an external organization (usually another university) or government surplus.

CROSS

REFERENCES:

CSOP 4.0 Physical Inventories
CSOP 8.0 Capitalization of Moveable Equipment
Policy FIN-ACC-I-150 Capitalization of Moveable Equipment

RESPONSIBLE

ORGANIZATION:

Organizations that receive capital assets that have been transferred from other universities, non-profit organizations, or government surplus.