Revision Log Sheet Sub-Section Revision
Start Revision End for Posting Sent to IT Summary of Changes All 04/01/04 5/17/04 Entire Fixed Assets Procedure
has been updated to reflect current accounting and inventory practices.
11.1.3.G.3 01/12/09 01/27/09 1/27/09 Changed inventory threshold from $500 to $1000
11.1.3.H 01/12/09 01/27/09 1/27/09 Changed inventory threshold from $500 to $1000
11.1.3.K.4 01/12/09 01/27/09 1/27/09 Changed inventory threshold from $500 to $1000
11.1.3.L 01/12/09 01/27/09 1/27/09 Changed inventory threshold from $500 to $1000
THE FIXED ASSETS SYSTEM 11.1.0
Purpose 11.1.1
The Fixed Assets System has been established for the following purposes: - To promote the care and security of fixed assets
- To provide basic statistical data pertaining to DCCCD-owned fixed assets
- To facilitate disposition of such property when it can no longer be used within the District or originating college
Fixed Assets Records 11.1.2 A. Fixed asset records are maintained using the Online Fixed Assets System.
B. The General Accounting Department transfers the records of purchased fixed asset items from the Accounts Payable System to the Fixed Assets System. The transfer is reviewed and updated by the Inventory Control Officer or designated college/location personnel. C. District Accounting Office staff directly input the records of donated fixed assets to the
Fixed Assets System.
D. Major adjustments to a fixed asset record (such as changing the status from active
to inactive, changing the purchase order number, description, value, bar code number, general ledger number, etc.,) are entered into the Fixed Assets System by the District Accounting Office based on receipt of appropriate documentation.
E. Transfers from one college or location to another are entered into the fixed assets
system by the District Accounting Office. Fixed asset location changes within the college (such as room changes) are updated by the Inventory Control Officer or designated personnel.
F. The District Accounting Office reconciles fixed asset records to the general ledger on a monthly basis.
G. Depreciation is calculated systematically on a monthly basis for depreciable, capital fixed assets and posted to the general ledger by the District Accounting Office. Fully depreciated fixed assets records continue to be maintained for inventory purposes.
1. At the end of each year depreciable assets that are not equipment or furniture, i.e. land improvements, building improvements, software and modular furniture, will be capitalized, assigned a bar code, and entered into the Fixed Assets System.
Calculation of depreciation will begin September 1 of the new fiscal year for such items.
2. Buildings will be capitalized, assigned a bar code and entered into the Fixed Assets System for depreciation to begin being calculated the September 1 of the fiscal year following building completion.
Definitions 11.1.3
A. Bar code Numbers
A bar code number shall be used to identify a fixed asset. A new bar code number shall be used to replace an original fixed asset bar code number that has been removed, misplaced, or lost.
1. A bar code number with a sequential number imprinted into the material must be used to identify a fixed asset item that is furniture or equipment.
2. When an original bar code number is changed by a new bar code number (as a replacement bar code number) the change will be recorded on the Bar Code Assignment Log by listing the old bar code number and the new bar code number. 3. Special bar code numbers will be assigned to fixed assets such as buildings and
building improvements, land improvements, software and modular furniture. (See Attachment A)
B. Capitalized Fixed Assets
Assets with a unit value of $5,000 or more are categorized as capital assets with the exception of land and library books, which should be capitalized regardless of amount. 1. Capital asset types
a. Non-depreciable Assets 1. Land (LAND)
2. Construction in Progress (CIP): Costs of capital improvements and construction not yet completed. All expenditures made for building improvements & for construction of new buildings should be
capitalized to an appropriate CIP account at fiscal year-end if not completed.
3. Library Books: (The records for Library books are not maintained in the Colleague Fixed Assets System. They are maintained on a separate library system.)
b. Depreciable Assets
1. Land Improvements (LIMP) 2. Building (BLDG)
3. Building Improvements (BLDG) 4. Equipment (EQPT)
5. Furniture (FURN) (including modular furniture) 6. Software (SOFT)
C. Case Goods
Case goods are items that stand alone and are functional by themselves, i.e. tables, chairs, file cabinets, etc. Separate parts, such as a tabletop versus a table base are not considered modular furniture because the assembled product (the entire table) is stand-alone and does not require an entire system in order to be operable.
D. Component
A component is an item of equipment that may be added to another piece of equipment to add effectiveness or enhance utility. While it may not lose its identity by attachment, it is not productive without application to or use with another piece of equipment. Components may be internal, such as memory chips, and therefore not visible.
E. Depreciation
Depreciation is the process of allocating cost of a capital asset over its estimated
useful life. DCCCD calculates and posts depreciation on a monthly basis using the Straight Line Method of depreciation. Based on this method Annual Depreciation expense = (Total Cost – Residual Value)/ Estimated useful life.
F. Estimated Useful Life
Estimated useful life is the number of years that an asset is expected to be useful for the purpose for which it was purchased. DCCCD uses the following useful life table for capital asset types.
Capital Asset Type Useful Life
1. Building 50 YEARS
2. Building Improvements 25 YEARS or remaining life which ever is lower 3. Land Improvements 20 YEARS
4. Furniture (including modular) 10 YEARS
5. Equipment 10 YEARS 6. Telecommunication & Peripheral Equipment 5 YEARS 7. Software 5 YEARS G. Fixed Asset
A physical inventory item must possess all of the following characteristics to be classified as a "fixed asset":
2. It is non-expendable. If the article is damaged or some of its parts are lost or worn out, it is usually more feasible to repair it rather than to replace it with an entirely new unit.
3. It represents an investment of money of at least $1000. This monetary limit applies to all funds.
4. It does not lose its identity through incorporation into a different or more complex unit or substance.
5. It has an estimated useful life of more than one year. H. Minor Equipment or Furniture
Minor Equipment and/or furniture are items of physical equipment that have a unit price of at least $1000.00 but less than $5000.00 and a useful life expectancy of more than one year. Minor equipment and furniture items that are not modular shall be assigned a bar code.
I. Modular Furniture
Modular furniture can also be described as systems furniture. The various parts are not functional without the other component pieces to form an entire workstation. For instance, walls and flipper doors and work surfaces, etc., all work together to form a system that cannot operate without the individual parts.
J. Residual Value
The residual or salvage value of an asset is the value it is expected to have when it is no longer useful for its intended purpose. DCCCD uses the following residual table for asset types.
Capital Asset Type Residual Value
1. Building 10% OF ORIGINAL COST
2. Building Improvements? NONE
3. Land Improvements 10% OF ORIGINAL COST
4. Furniture NONE
5. Equipment NONE
6. Telecommunication &
Peripheral Equipment NONE
7. Software NONE
K. Supply Item
An item categorized as "supply" possesses one or more of the following characteristics: 1. It is a material unit that is consumed over a period of time.
3. It loses its identity when incorporated or mixed into a different or more complex substance.
4. It has a unit cost (generally less than $1000.00), which makes it impractical to control.
L. White DCCCD Property Tags
A white DCCCD Property Tag (not numbered) is used for minor equipment or furniture for which the assignment of a bar code number is not applicable. Such items have a value less than $1000 but are susceptible to theft.
ATTACHMENT A
CAPITAL ASSETS BAR CODE NUMBERING SCHEME FOR NON-INVENTORIABLE, DEPRECIABLE ASSETS Asset
Type Asset Type Capitalization Bar Code Numbering
Code Description Policy/Year Method
1. BLDG New Building Start of Fiscal Year after Completion
LO-N-000 (six digits)
Where LO = 1st two letters of the location (BH, CV….) Where N = 1st letter of the building name (BHA for A building)
Where 000 = Can be used in the future. 2. BLDG Renovation Building End of year of completion using Cumulative expenditures for the project
LO-YYYY-BL (Eight digits)
Where LO = 1st two letters of the location (BH, CV, …) Where YYYY = The Fiscal Year the expenditure is completed. Where BL = Building 3. LIMP Land Improvement End of Year using cumulative expenditures for the year
LO-YYYY-LI (Eight digits)
Where LO = 1st two letters of the location (BH, CV, …) Where YYYY = The Fiscal Year the expenditure
occurred.
Where LI = Land Improvement
Note:
There are no new and renovation land improvement types. All land improvement expenditures will be capitalized at the end of each fiscal year.
4. SOFT Software End of Year using cumulative expenditures for the year
LO-YYYY-SW (Eight digits)
Where LO = 1st two letters of the location (BH, CV, …) Where YYYY = The Fiscal Year the expenditure
occurred.
Where SW = Software
Note:
A software purchase transferred through the Colleague system will follow a bar code scheme similar to EQPT and FURN 5. FURN Modular Furniture End of Year using cumulative expenditures for the year
LO-YYYY-MF ( Eight digits )
Where LO = 1st two letters of the location (BH, CV, …) Where YYYY = The Fiscal Year the expenditure
occurred.
