UCAR
PROPERTY MANUAL
Property Homepage
Manual TOC
3--Guidance
4--Contacts
5--DPA Responsibilities
6--Meeting Notes
7--Responsible Person
Duties
8--Sensitive Property 9--Capitalization Guidelines
Section 3-2: Fixed Asset
Definition and Types
Definition of a Fixed
Asset (FA)
A Fixed Asset is
of a durable nature with an expected useful life of at least 1
year
AND
Will retain its
individual identity throughout its useful life
AND
Costs $5,000 or
more.
- Is of a durable
nature with an expected useful life of at least 1 year. If
an item is expendable (will be used up) or has an expected useful
life of less than a year, it is not a FA, regardless of cost.
- Will retain its
individual identity throughout its useful life. For an item
to be a FA it must have an individual or separate (from other
items) identity and retain that identity throughout its useful
life. If it is to be incorporated into something else, then it
is part of that larger thing rather than being a separate asset
unto itself.
For example, 182
gigabytes of memory (approx. $6K) is part of the server on which
it is loaded and will not retain an individual identity throughout
its useful life. A spectrum analyzer, on the other hand, does
retain its own separate identity throughout its useful life
and, therefore, would be a FA.
- Costs $5K or more.
In this context, the FA would include those components necessary
for the item to perform its intended function. For example, a
workstation without a monitor cannot function and, therefore,
the monitor is part of that FA; a workstation without a printer
can function and, therefore, a printer is not part of the FA.
It is sometimes unclear
whether a component is part of a FA or not. In such cases, please
call the Property Office for assistance.
Types of Fixed Assets
In the UCAR environment,
costs which constitute the "acquisition cost" of a FA
depend upon whether that asset is useable upon receipt, requires
some assembly, or is constructed from basic materials and supplies.
The designations used to identify these FA categories are as follows:
Basic
Useable upon receipt.
May require minimal setup but basically can be connected to a power
source and used as is. Basic FAs tend to be "off the shelf"
items in one piece. The "acquisition cost" of a Basic
FA is the amount paid for the item itself.
A 55xx object code is
used on the requisition and in the UCAR accounting system to identify
the purchase as a FA.
Assembled (System)
Received in multiple
components and readily assembled into a functioning asset. An Assembled
FA is a standard "off the shelf" purchase (using one or
more Purchase Orders) received as multiple components and assembled
after receipt. Components must all be ordered and received within
approximately a six (6) month time frame. The acquisition cost of
an Assembled FA is the total amount paid for its individual components.
Individual components (excluding materials and supplies such as
additional cords) use a 55xx object code.
Constructed (CIP; Construction In Process)
Received as equipment,
materials, services, and supplies and constructed (and often designed) by
UCAR (includes design by UCAR-employed subcontractor). The key to
a constructed FA is that the final, functioning asset is not available
"off the shelf" but is built or constructed by UCAR
to unique specifications. These are referred to as CIPs (construction
in process) or Constructed Assets.
The acquisition cost
of a Constructed FA is the total paid for all costs (equipment,
materials, services, supplies, freight, salaries, benefits, overhead, etc.)
incurred in the process of designing and building the asset. Only
equipment that would have been stand-alone FAs if not incorporated
into the Constructed FA use a 55xx object code. Other items
use a 52xx or a 53xx object code as appropriate.
Prior to starting work
on a Constructed FA, the division must set up a unique account key
designated "CIP" to electronically collect all costs associated
with construction of the asset. This is one account key for one
constructed asset. In some circumstances the division may establish
more than one account key for one constructed asset but never the
reverse, multiple constructed assets to one account key, unless
the constructed assets are identical and constructed at the same
time.
Only costs associated
with constructing the asset are charged to the key(s) and when the
construction is complete and the asset placed in service, that key
is closed. It is the responsibility of the DPA or division administrator
to notify the Property Office when the asset is placed in service
so that the FADB record can be adjusted to reflect this "placed
in service" status. (This status change starts depreciation
for the FA.) As soon as all construction costs have hit the account
key, the division requests that the account key be closed so that
no further costs accumulate in that key.
The variables involved
in Constructed FAs make it impossible to provide exhaustive guidance
in this format. Therefore, if your division is planning to acquire
a FA that might be considered a Constructed FA, please contact the
Property Office and your Project Accountant before beginning the
project and/or procurements so that costs can be collected in the
most efficient manner possible. This will save the division substantial
time in identifying all the costs later.
Deliverable Fixed Asset (DEL)
Any fixed asset whether purchased, assembled or constructed, that will be delivered to the sponsor per the agreement. Once delivered this fixed asset will no longer be in the custody and accountability of UCAR and will be removed from our list of assets.
Add-Ons
In this context, an Add-On
is a component (1 item) added to a FA more than 6 months after the
original acquisition (or completion, if a constructed asset) and
which can be procured in a 55xx object code with its cost added
to the original depreciable cost of the asset.
To qualify as an Add-On
to the existing FA, the new component must:
- Be permanently and
intrinsically tied to the FA for the duration of the FA's UCAR-life
and
- Have an acquisition
cost of at least 10% of the current FA cost (minimum $1K).
If the current FA cost is greater than $50K, the new component
must cost $5K or more but need not meet the 10% requirement and
- Increase the FA's
capacity, functionality, or operating efficiency and/or extend
its useful life by at least 1 yr, and
- Be purchased with an
account key that preserves the integrity of original title
assignment.
Title to equipment is
based on the terms and conditions of individual agreements.
Account keys will be evaluated to allow for the appropriate assignment
of ownership.
See the Add-On
Decision Tree to make this determination. If the above criteria
are met, submit an Add-On
Form to the Property Office when the Requisition is issued to
the Contracts Office.
Upgrades
In this context, an upgrade is a replacement component that will now perform a function or provide additional capabilities it was unable to perform previously.
(This is a new function, not an enhancement of a function performed previously)
To qualify as a capitalized upgrade to the existing FA, the new component must:
- Be permanently and intrinsically tied to the FA for the duration of the FA's UCAR-life and
- Have an acquisition cost of at least 10% of the current FA cost (minimum $1K).
If the current FA cost is greater than $50K, the new component must cost $5K or more but need not meet the 10% requirement and
- Perform a function or provide additional capabilities it was unable to perform previously and be documented through the Capitalization Decision Form and
- Be purchased with an account key that preserves the integrity of original title assignment.
If above statements hold true, the additional purchase may be included in the cost of the FA and depreciated. Issue a requisition using a 55xx object code and reference the existing FA PPE tag number. Fill out a Capitalization Decision form, documenting the functionality of the asset and how it will perform with the new purchase, and send it to the Property Office.
To access the decision tree and form, click on the links below.
Capitalization Decision Tree
Capitalization Decision Form
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