What is considered an asset?
An asset is defined as long-term, tangible property owned by the University that cannot be easily converted to cash and will be held for a long period. For most departments, this translates to equipment. The University of Nebraska capitalization policy states that all equipment purchased with a unit cost of $5,000 or more that has a useful life of more than one year is an asset and must be tagged/capitalized. Buildings, land and land improvements are also assets that are capitalized but not tagged. For more information on assets, see the University of Nebraska capitalization policy. Click here for information on fabricated equipment.
Does all equipment that costs $5,000 or more get tagged/capitalized?
No. The following items are never capitalized regardless of their cost:
- Blinds, shades, wall-to-wall carpeting and similar items
- Software not purchased in conjunction with related hardware
- Equipment that is permanently built-in or installed
- Library book, art and museum objects
- Cubicle walls, shelving, lockers and trophies
How do I know when an item should be expensed rather than capitalized?
Repair/replacement/spare parts or components are not tagged/capitalized and the cost should be expensed. Materials consumed in the day-to-day operation of the University are considered supplies and therefore are not tagged/capitalized and should be expensed. If parts or components are purchased to upgrade an existing tagged/capitalized asset (whether it extends the life or not), the upgrade cost will be capitalized by adding to the cost of the original asset. When an existing tagged/capitalized asset is completely replaced, the old asset will be retired and the new asset will be tagged/capitalized if its unit cost is $5,000 or more.
What is the difference between moveable and fixed equipment?
Moveable equipment is generally an item that is purchased as one unit to operate as a stand-alone unit or work and function as a system and can be moved somewhat easily. This may mean taking a skid loader to move but it doesn't require tearing down walls, etc. Moveable equipment is tagged/capitalized if it meets the criteria in the capitalization policy.
Fixed equipment is equipment that is built in or permanently installed in a building or structure, typically before building completion. Examples of this are fume hoods, lighting fixtures, HVAC duct work, etc. Fixed equipment is generally not tagged but is capitalized as part of the building provided the cost of the project is $500,000 or more. When the project total is less then $500,000, the associated fixed equipment would not be capitalized as part of the project because the project does not meet the building capitalization threshold.
How do I dispose of capitalized/tagged equipment?
See the UNL Property Policy for steps to dispose of excess property.
How do I transfer capitalized/tagged equipment to another department?
See the UNL Property Policy for transfer procedures. Look at section titled "By Transfer."
How do I trade-in existing capitalized/tagged equipment for new equipment?
See the UNL Property Policy for trade-in procedures. Look at section titled "Trade-In."
The following information should be included on the PO when a trade-in is involved:
- If traded asset was tagged, provide the inventory tag #/asset #/serial #.
- If traded asset was not tagged, provide the date of original purchase and value (provide invoice if available).
- Provide allowance given for traded asset.
How do I report a non-monetary donation or gift?
Non-monetary donations and gifts (equipment, land, textiles, manuscripts, etc.) with a combined value of $5,000 or more that are received from outside sources need to be reported by completing the Donation/Gift Form. The value of each donation will be recorded to your department's 27 donation/gift WBS.* The donor must provide a value of the gift when it is donated. If the donor refuses to provide a value, the department/college is responsible for obtaining an appraisal so a value can be established. Donations cannot be valued by University staff/faculty. The recorded gift revenue and corresponding expense will net to zero and have no effect on the balance in the provided cost object. If the value of the donation or gift meets the criteria in the capitalization policy, it will be tagged and capitalized. Departments receiving non-monetary donations directly (not through the Foundation) should provide the Assistant Vice Chancellor for Financial Services the donor contact information, description of item(s) donated, and value. The Assistant Vice Chancellor for Financial Services will send a letter to the donor acknowledging receipt of the item(s) and thanking them for their generosity.
If you plan to dispose of the donated property within three (3) years of the date of the donation, please be aware of the IRS requirement related to Form 8282. Such disposal may have a negative impact on the charitable income tax deduction claimed by the Donor. If you have any questions, please contact Liwei He, 472-4316, or Ben Mayeux, 472-3966.
*If your department does not have an established donation/gift WBS, please contact your Grant Coordinator in Sponsored Programs.
What do I have to report to Accounting when I lease equipment?
There are two types of leases. Capital leases cover equipment where title/ownership transfers to the University at the end of the lease. Because the equipment becomes the property of the University, it will be tagged if it meets the capitalization threshold. Operating leases cover equipment where ownership is NOT transferred to the University and equipment is returned to the vendor at the end of the lease. Payments under operating leases are for temporary use of equipment and therefore the equipment will not be tagged regardless of the amount of the total lease payments.
Please provide Accounting with the following items for any leased equipment:
- Signed lease agreement
- Amortization/payment schedule
- Purchase order or invoice (only for capital leases)