Financial Services & Payroll

Fixed Asset Guide

Introduction

At Montana State University Billings, each University employee has a general obligation to safeguard and make appropriate use of property owned by or accountable to the University. Responsibility for fixed asset property management is held in the Financial Services Office.  Ultimately, the Montana University System has title and ownership of all University property. Actual possession, use, and accountability are maintained on the department level.

The Banner Fixed Asset module is a centrally maintained subsystem of Banner.  It is used to manage and account for the University’s investment in fixed assets (property, plant and equipment) and intangible property (software).

Purpose

The complete and accurate accounting of fixed assets is very important.  Adequate accounting procedures and records are essential for the protection of State property.  The responsibilities of stewardship involved in safeguarding such a large public investment is of great importance to sound financial administration. 

A system of property accounting and management allows the assignment of responsibility for custody and proper use of property with University officials.  The system also provides for the important tracking of location, cost, funding source, depreciation and useful life.  Finally, the accounting for property is essential to the preparation of satisfactory and complete financial reports.

Definitions

Fixed Asset – an asset of a relatively permanent nature with a useful life of more than one year whose identity does not change with use.  The unit must be identifiable and separately accounted for.

Capital Fixed Asset – a fixed asset with a unit cost of $5,000 or more that is recorded in the financial statements. Expenditures are posted to 63xxx and 64xxx account codes.
 
Non-Capital Fixed Asset – a fixed asset with a unit cost below the capitalization threshold (e.g. $5,000 for equipment and $25,000 for buildings). While not required for financial reporting purposes, management has chosen to record these assets in the Fixed Asset module for tracking and accountability purposes.

Intangible Asset – a long-lived legal right, in the case of software, the right to use the software.

Supplies and Materials – Consumable commodities purchased for inventory or immediate consumption; articles and commodities, which are consumed or materially altered when used; and software and fixed assets that do not meet the cost threshold for non-capital or capital assets. This may include operating supplies, office supplies and small tools.  Expenditures are posted to 622xx account codes.

Asset Tag – a pre-numbered identification tag affixed to fixed assets for inventory, warranty, identification and stewardship purposes.

 Capital, Non-Capital and Sensitive Property

Property is considered capital in nature and is tagged as such when it meets all of the following criteria:

  • The unit cost (or estimated value for donated items) is equal to or greater than the capitalization threshold for the specific type of asset (see MSU Capital Asset Policy). Included in this calculation may be freight and other costs needed to bring the asset into its intended use.
  • The unit’s estimated useful life is greater than 1 year
  • The unit’s identity does not change with use
  • It is non-consumable in nature
  • It is identifiable and can be separately accounted for

Property is considered non-capital in nature and is tagged as such when it meets the following criteria:

  • The unit cost is greater than $1,000 but less than the capitalization threshold for the type of asset.  Included in this calculation may be freight and other costs needed to bring the asset into its intended use.
  • Criteria 2-5 above for capital property.

Sensitive property includes items that possess a special risk of theft due to marketability and/or portability or that present a risk to safety. Sensitive property includes, but is not limited to:

  • Information Technology related electronics, computer and audio visual equipment
    • Computers: laptop, desktop, tablet
    • Video equipment:  projectors, recorders, monitors, televisions
    • Cameras: digital, video
  • Firearms
  • Musical equipment, systems and instruments
  • Certain chemicals, as may be deemed sensitive by the Safety and Risk Management Office.

The Fixed Asset module is used as a means to record capital and non-capital property.  Required accounting entries for capital property are made in the general ledger for financial statement reporting. 

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