Property Management Capitalization Quick Review

Why It’s Important  Subject to audit by our external auditors  Annual property review by ONR  Property reporting on sponsored agreements  Financial Statement impact

Capitalization Thresholds  Capitalized equipment has a cost of => $5,000 per single functional unit, inclusive of shipping and installation. Equipment to be capitalized must have a useful life of 1 year or more  Computer Software –with a cost of => $100,000 or more per license  Fabrications consist of purchases that can be $5,000 $5,000

Equipment Line Items  Equipment => $5,000 – Computer Equipment Office  Office Computer Software Equipment => $25,000 per License  Equipment => $5,000 – Office & Communication  Equipment => than $5,000 – Research & Educational

Equipment Line Items continued…  – Equipment => $5,000 – Household & Furnishings  – Equipment => $5,000 – Medical Equipment  – Equipment => $5,000 – Vehicles  – Equipment => $5,000 – Farm & Construction Equipment  – Equipment => $5,000 – Other Capital Equipment

Equipment Component Line Items Components increase the value of existing units of capitalized equipment or are combined to fabricate a unit of equipment with a cost of =>$5,000  Equipment Components < $5,000 – Computer Related  Equipment Components < $5,000 – All Other All Other

What does it mean when I pay something on a capitalized line item (5410XXX series)?  The item meets the definition of capitalized equipment  A WVU tag number prefixed with the alpha characters of ‘OCXXXXX needs to be affixed/assigned  An asset acquisition form or fabrication modification form should be submitted to Property Management  If the purchase does not result in an asset being added or increased in value in the Fixed Asset module, use a general expense line item

Coding Shipping/Freight on Equipment Purchases  Shipping charges should be coded the same line item as the equipment  If supply and equipment items are billed on one invoice – the shipping should be prorated between the items.  Contact Property Management to assist you with prorated shipping charges

Procurement Card Purchases  If you code a p-card purchase with a capitalized line item (5410XXX series), please send a copy of the invoice/packing list to Property Management upon receipt of the documentation.  Fax to Randy Powers at , or  Scan and copy to or  Mail to Property Management, PO BOX 6001

Examples  Tires are replaced on a vehicle – are they a component? – NO – expense line item  14 computers are $3,400 each that are to be individually functional for a total price of $47,600 – capitalize? – NO – use general expense line item  A specialized lens for a capitalized microscope is acquired – is this a component? – YES – use the component line item

Line Item Coding Tips  Repairs fall under the line item prefixed by 5340XXX  Replacement parts for units of equipment that do not increase the value fall under the line item prefixed by 501XXXX  General expense equipment (cost < $5000) fall under the line item prefixed by 501XXXX  Maintenance of existing equipment falls under the line item prefixed by 501XXXX

Line Item Coding Tips  Software with a value of < $100,000 should be recorded as a general expense:  Software < $5,000 should be coded  Software => $5,000 but $5,000 but < $25,000 should be coded

Property Management IU’s  When items are coded incorrectly, Property Management is creating the IU’s to correct the erroneous coding  We use the following numbering scheme for IU’s: IU (Invoice Number) (period invoice processed) (initials of person) Example: IU54892DEC08JB  If you do not use this numbering method, be certain to reference the invoice number and period name of the original purchase on the IU