Recharge Standard Operating Procedures

 

SUBJECT:

Recharge/Service Center Capital Purchases

SOURCE:

Cost Accounting, Financial Management Services

DATE ISSUED:

December 2015

DATE OF LAST REVISION:

 

N/A

RSOP NO:

4.0 

RATIONALE:

To provide guidance to recharge/service centers on the allowable ways to purchase capital assets associated with the recharge activity.

RSOP:

Capital assets associated with a recharge/service center activity need to be purchased out of a renewal and replacement (92) account within the same organization as the recharge/service center (66) account. Cost accounting standards do not permit the recharge/service center to recover the cash outlay for capital asset purchases in their annual rates. However, the regulations do allow the unit to include the depreciation of these capital assets in rates billed. Cash equal to the annual amount of depreciation may be transferred from the recharge/service center (66) account to the renewal and replacement (92) account to fund future capital purchases.

 

If the recharge/service center purchased the capital asset from the recharge/ service center (66) account, a non-recharge center account will be required to transfer cash into the recharge/service center (66) account to fund the asset and offset the impact of the purchase on fund balance.

 

Exceptions for fabrications may apply. Please contact cost accounting with questions.


 

DEFINITIONS:

Capital Assets: An item that is acquired and is classified as an asset on the balance sheet because it has a useful life expectancy of one year or greater and meets or exceed the capitalization threshold.

 

Depreciation Expense: Equal allocation of the cost of a capital asset on the balance sheet to the income statement during the periods in which the asset is used.

 

Renewal and Replacement Account: Accounts used to set aside funds for replacement of renewable property (typically capital assets or desktop computers).

 

Recharge/Service Center Activity: An activity that furnishes goods or services to another Indiana University department for the convenience of the university and charges a fee directly related to, and not more than the allowable cost to provide the goods or services.

CROSS

REFERENCE:

 

OMB Uniform Guidance (PDF) "Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards"

 

RSOP #3: Including Annual Depreciation Expense in the Recoverable Rate Calculation

 

RSOP #7.0 Recharge Center Transfers

RESPONSIBLE

ORGANIZATION:

 

Organizations that bill other Indiana University departments for goods or services