The purpose of the asset management process, which is jointly administered by Inventory and Accounting, is to ensure that UNL complies with government regulations regarding capitalization of equipment, land improvements, buildings, etc. Each fixed asset is assigned a code so it can be capitalized and depreciated over its useful life. The information below will assist departments to identify and code assets.
What is an asset?
An asset is defined as a 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 moveable equipment. The University of Nebraska Capitalization policy states that all moveable 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.
What is capitalization?
Capitalization of assets refers to the accounting practice of recognizing a cost as a long-term asset rather than an immediate expense. Instead of being deducted in the year of purchase, the cost is spread over the asset's useful life, reflecting its contribution to generating revenue. Depreciation refers to the systematic allocation of a capitalized asset's cost over its useful life.
UNL capitalizes assets that are valued at $5000 or more.