Fixed Asset Guide
INTRODUCTION
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). Responsibility for fixed asset property management is held in the Financial Services Office.
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 VERSUS NON-CAPITAL
Property is considered capital in nature and is tagged as such when it meets all of the following criteria:
-
The unit cost is equal to or greater than the capitalization threshold for the specific type of asset. 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.
Property with a unit cost below $1,000 is not tagged, inventoried or recorded in the Fixed Asset module.
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.
Previous Page | Next Page | Fixed Asset Guide Table of Contents
