Purchases of Equipment

 

Purchase requisition (P-req)

The University provides for the purchase of equipment through use of the Purchasing/Accounts Payable system.

  • Complete a P-req to order capitalizable equipment.
  • The selection of Iacts 6730 will generate a pop up box requesting additional asset information (see Asset Description Memo). It is necessary to complete this information for an accurate asset record.
  • If there will be one or more down payments/prepayments prior to receipt of the asset, please indicate the estimated due date for University possession of the asset in the “Internal Comments” section of the P-req. CAM will use this date in asset set-up to begin depreciation of the asset.
  • List the asset tag number and, if possible, the manufacturer’s serial number of any equipment assets to be traded-in for new assets in the Asset Management section of the Preq. The new equipment will be capitalized at its total value, rather than cost less the trade-in. The value of the trade-in offsets net book value for the asset traded-in.

Assets are set-up from vouchers. Daily, CAM runs a report showing general ledger transaction in IACTs 6730. From this list, CAM sets up assets by recording information from the P-req, Purchase Order, and Voucher into the property management system (PSAM) and coordinating any necessary accounting corrections.

Capitalizable costs include the cost of the item as well as costs paid to a vendor for freight, installation, set-up, and/or testing. These same costs are used to determine if an expenditure meets the $5,000 minimum cost for capitalization (it must also have a useful life of more than one year). The asset capitalized is an item and components that can stand-alone are not part of the asset (exception: system assets at UIHC).

- Back to Top -

Purchase Order Iact Corrections

  • Departments are responsible for submitting the correct MFK on a P-req. Expenditures that meet the University minimum capitalization threshold qualify as an equipment or software asset and require the use of Iact 6730.
  • After the Purchase Order is dispatched, all changes to Iacts 6730 must be made by CAM. CAM reviews a daily report of purchase orders charging Iacts 6730, and 6085. CAM corrects the assignment of expenditures between these Iacts, if necessary, prior to voucher entry based on minimum capitalization threshold guidelines.
  • During asset set up, CAM may “Change Voucher” (CV) vouchers charged to Iacts 6730 to another Iact if it does not appear to meet the minimum capitalization threshold.
  • During the year in which the asset is acquired, departments may “CV” changes to all MFK elements, with the exception of the Iact. CAM adjusts asset records to match to “CV”.

Upon receipt and posting of vendor invoices, the Accounts Payable Department forwards a copy of the voucher to the Requisitioning Department. Printed at the bottom of the voucher is an “Equipment Inventory Information Form”. The Requisitioning Department should complete information not known at the time of the requisition, such as serial number, provide the date the asset was received, and sign and return the document to the Accounts Payable Department. After review, Accounts Payable Department forwards the document to CAM to update the asset.

Note: assets should be capitalized and begin depreciating as of the date the University owns them. The date the asset was received provides support for capitalization in the correct fiscal year.

During set-up the asset is entered with an asset “profile”. The profile describes a type or class of asset and establishes the useful life over which the asset is depreciated. For an asset acquired in Orgs 65, 70-85, useful life is based on American Hospital Association (AHA) guidelines. For all other departments, useful life is based on an estimated economic life for that asset profile.

For each taggable asset, CAM sends a tag card (information on a half-sheet of copy paper) along with a matching bar-coded identification tag to the Department. The Department attaches the tag to the asset, makes any necessary updates to the tag card, and returns the tag card to CAM.

  • The asset tag should be placed on the asset in a position that is easily viewed for physical inventory tracking purposes and on a part of the asset that is permanent, i.e. not on a cover that may be removed during the asset’s life.
  • The tag is a sequentially-numbered identifier of the asset. There is only one tag per asset.

For more information, see Asset Life - Equipment Identification.

- Back to Top -