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, but are combined to form a single functional unit of equipment => $5,000

Equipment Line Items 5410101 - Equipment => $5,000 – Computer Equipment Office 5410201 - Office Computer Software Equipment => $25,000 per License 5410301 - Equipment => $5,000 – Office & Communication 5410401- Equipment => than $5,000 – Research & Educational

Equipment Line Items continued… 5410501 – Equipment => $5,000 – Household & Furnishings 5410602 – Equipment => $5,000 – Medical Equipment 5410701 – Equipment => $5,000 – Vehicles 5410802 – Equipment => $5,000 – Farm & Construction Equipment 5410902 – 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 5410112 Equipment Components < $5,000 – Computer Related 5410411 Equipment Components < $5,000 – 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 293-6856, or Scan and email copy to assetmg@mail.wvu.edu, 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 acquired @ $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 5011105 Software => $5,000 but < $25,000 should be coded 5011111

Property Management Internal Transfers When items are coded incorrectly, Property Management will ask the department to fix the line item coding with an Internal Transfer (IT) or Property Management may create an IT to fix the error If the department creates the IT to fix the error, please be sure to: Reference the invoice number and period name of the original purchase in the description of the IT Attach a copy of the original vendor’s invoice as support to the IT