Business Policies - Asset Capitalization Minimum Value

TO: All Members of the University Community 2001:04

DATE: June 2001

Asset Capitalization Minimum Value
(Effective July 1, 2001)
(Supersedes 1999:04)

1. PURPOSE

   The University capitalizes the original cost of equipment purchases and gifts in kind in the normal course of operations as required by GAAP (Generally Accepted Accounting Principals). The original cost capitalized is depreciated over its estimated useful life.

   This policy establishes the minimum value threshold for capitalization.

2. POLICY

   The University will use the Financial Records Systems (Purchasing, Accounts Payable and Financial Accounting modules) to identify the original cost of assets acquired by the University. Once an item is identified to be capitalized, an asset record will be established in the Fixed Assets System (FFX). The FFX system will record all accounting entries for capitalization, cost changes, depreciation, and disposals. The University capitalizes assets that cost $5,000.00 and greater.

3. PROCEDURE FOR ESTABLISHING CAPITALIZATION MINIMUM

   The Associate Vice President for Finance determines a value that conforms to the Universities objectives while remaining in compliance with applicable pronouncements of FASB (Financial Assenting Standards Board) and GASB (Governmental Accounting Standards Board) and other regulatory agencies.

   1. The Accounting office staff periodically analyzes current industry and regulatory agency practice related to minimum values.
   2. The Director of Accounting Services monitors regulatory agency pronouncements.
   3. The Accounting office staff will perform data analysis on the University's fixed assets database to determine what impact will occur as a result of the minimum being altered.
   4. The Director of Accounting Services will notify the Associate VP for Finance if it is appropriate to change the University's minimum capitalization value.
   5. The Associate VP for Finance will recommend minimum value changes to the VP for Administration and Finance for approval.

Richard Duffett, Vice President
Administration and Finance

CONTACT: Associate VP for Finance