Equipment

Equipment

Standard Practice Guide 520.1: Acquisition, Use and Disposition of Property (Exclusive of Real Property) provides guidance on the proper acquisition, management and disposal of equipment.

Equipment (including Musical Instruments) is capitalized and depreciated if it meets all of the following criteria on a per item basis:

  • Cost at or exceeding $5,000
  • Useful life of two or more years
  • Freight, transportation charges and installation costs, if billed separately, are excluded from the cost of the asset.  

 Financial Operations’ policy states that assets are not to be retired in Asset Management until one of the following criteria have been met:

 

  • Item has been sold to an external entity,
  • Item has been scrapped as no longer useful,
  • Item has been transferred to another Institution or University,
  • Item has been destroyed (i.e. theft, fire, flood, damaged, etc.)

Please note that Financial Operations’ policy requires assets that are either partially or fully depreciated, but still in use, to remain in asset management until they are retired for one of the above reasons.  For more information on University policies regarding disposition of assets, see SPG 520.01.

Equipment Account Codes

Currently the University uses ten account codes to categorize moveable equipment purchases; See below for a list of the accounts with descriptions.  The Procurement system has category codes specifically for equipment; See below for list of purchasing category codes to use when ordering equipment through Procurement Services.


Account

Account Description

Account Long Description

614000

Equipment -greater than $5,000

To record assets that cost $5,000 or more, with a useful life exceeding two years.

614030

Equipment Cost Distribution

To record the cost of equipment purchased by two or more separate chartfields.  The chartfields contributing the greatest share towards the purchase price of the equipment is charged for the entire cost of the asset at an equipment account other than 614030, usually account 614000.  The same chartfields are credited at 614030 for the amount of all other contributions by all other chartfields.   The other chartfields are debited at 614030 to record their share of the cost of the purchase.  If there is a Federal Project/Grant involved the entire cost must be charged to the Federal Grant and cost shared from there.

614020

Prefabricated Structures

Account to track the expenses for prefabricated structures.

 

614050

Software > $500,000

To record cost of software that is greater than $500,000, to be capitalized.

If software is developed internally the costs should be recorded in the fund 81000 (Construction – Info Tech) or 81500 (Construction – Hospital IT) using the proper accounts for capital versus non-capital.  Further discussion on internally developed software is provided in a separate document.

614060

Equip Fabrication-Spon Only

To record the non-labor cost of fabrications that is estimated to exceed $5,000. Upon completion of the fabrication, the total cost should be re-accounted to 614000 to be capitalized and included in the equipment inventory.  A set of separate chartfields is established to accumulate all non-labor costs. This account is generally used in Sponsored Funds but can be used in the Current Funds with consultation from Financial Operations.

614210

Equip – Upgrade Existing Equip

To record cost of upgrades that increases the value and performance of a piece of equipment.  This will be added to the original cost of equip >$5K.  Minimum threshold of $2,000.

614240

Equip – Federal Accountability

To record equipment, whose title may revert under some named condition to an outside sponsor, usually a federal agency.

614300

Sponsored Owned Equipment

To record costs of equipment purchased by the University, but title will rest with a sponsor.   Use of the equipment will remain with the intended project until the sponsor calls for it. Items will not be added to the UM Asset Management System but will be monitored by Property Control

614330

Sponsor Owned Equip – Fab

To record cost of a component that is added to the original piece of equipment or is a component of the original equipment owned by the sponsor.

615570

Musical Instruments> than $5k

To record musical instrument purchases that cost $5,000 or more per unit, with a useful life exceeding two years.


Purchasing Category Codes 

 

Category Code

Category Description

Account

Account Long Description

EQPCL

Equipment – Capital Lease

614105

To record and track all capital lease expenses. A capital lease is defined as purchase of a capital item on a payment plan

EQPCM

UM Equip Owned Fab – Spon Only

614060

To record the non-labor cost of fabrications that is estimated to exceed $5,000.  This account is to be used for Sponsored Funds only.

EQPFA

Equip – Federal Accountability

614240

To record equipment, whose title may revert under some named condition to an outside sponsor, usually a federal agency.

EQPMS

Equipment Operating Leases

614120

To record and track lease monthly payments.

EQPMT

Equipment

614000

To record assets that cost $5,000 or more, with a useful life exceeding two years.

EQPNI

Clinical Equip Need Inspection

614100

To record costs of Health System capital equipment that needs inspection prior to patient service use by departments.

EQPPR

Equipment Partial Replacements

614180

To record costs of a replacement, for a part that wears out or breaks within the original piece of equipment.  This cost is not added to the original cost.  Minimum threshold is $2,000.

EQPSC

Sponsor Owned Equip – Fab

614330

To record cost of a component that is added to the original piece of equipment or is a component of the original equipment owned by the sponsor.

EQPSO

Sponsored Owned Equipment

614300

To record costs of equipment purchased by the University, but title will rest with a sponsor.   Use of the equipment will remain with the intended project until the sponsor calls for it.

EQPTP

Third Party Owned Equipment

614320

To record costs of equipment owned by a third party, purchased on federal projects.  Title will rest with a third party upon completion of the project.

EQPUE

Equip – Upgrade Existing Equip

614210

To record cost of upgrades that increases the value and performance of a piece of equipment.  This will be added to the original cost of equip >$5K.  Minimum threshold of $2,000.

EQPXE

Xerox Equip Equity Payment

614090

To record lease payments related to the lease agreement program we have for printer and copiers.

GENMU

Musical Instruments

615570

To record the purchase of musical instruments that cost $5,000 or more, with a useful life exceeding two years.

Equipment Transfers between University Departments:

 

To process equipment asset transfers between university departments, send an email to amtransfers@umich.edu and include the asset transfer form (at the bottom of the page) and an email between both Departments acknowledging the release and receipt of the equipment being transferred, which will provide Financial Operations the information needed to process the transfer in the Asset Management system.

 


What to do with Equipment claim checks from Risk Management:

When an item has been destroyed (theft, fire, flood, etc.), a claim through Risk Management should be processed.  Refer to Risk Management’s Property Insurance Coverage website for more details.  Property insurance coverage covers property losses associated with all campuses. Coverage provides for University of Michigan Owned or Leased Property – Replacement cost or actual cash value of equipment will be reimbursed upon receipt of a properly submitted claim.  Claims checks should be deposited to the Chartfield in which you are purchasing replacement equipment at account code 620130 to allow for proper accounting by Financial Operations within the general ledger and the asset management system.

Financial Operations needs proper documentation of a successful claim to remove an asset from service.  Please send the following documentation to amtransfers@umich.edu for processing:

  • A copy of the claim form from Risk Management
  • Cash Receipt Number for the deposit of the claim check
  • Equipment tag number
  • PO number for the replacement equipment, if the equipment was replaced

 

How to Handle Affiliate-Related Assets:

 

The information below establishes guidelines around how to handle assets owned by Affiliates of the University of Michigan as well as assets owned by the University but housed in Affiliate space.  There are several possible scenarios surrounding these types of assets to be addressed.

 

Affiliate owned assets in Affiliate owned space:

  • All assets will be recorded on the affiliates balance sheet and income statement as appropriate.
  • No assets will be recorded in the University’s asset management system.
  • Asset stewardship is the responsibility of the Affiliate

 

Affiliate owned assets in University owned space:

  • All assets will be recorded on the affiliates balance sheet and income statement as appropriate.
  • No assets will be recorded in the University’s asset management system.
  • Asset stewardship is the responsibility of the Affiliate

 

University owned assets in Affiliate owned space:

  • All assets will be recorded on the University’s balance sheet and income statement as appropriate.
  • All assets will be recorded in the University’s asset management system.
  • The departments owning the assets are to follow university policies regarding equipment.
    • Proper recording of purchases in the general ledger as well as in asset management
    • Proper stewardship of assets through the inventory management process
      •  Location of assets in an affiliated maintained space must still be inventoried according to University policy.
      •  Arrangements may be made with the Affiliate in question to handle inventory and other needs on a case by case basis.
    •  Proper disposal of assets by following the University’s Asset Management Equipment Retirement policy

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Asset Transfer Form Thursday, June 30th, 2016 at 4:16 PM