Purpose

To define general guidelines for the acquisition of university-funded and sponsor-funded equipment.

 

Background Information

Inventorying equipment or fixed assets is an accounting procedure, as well as, a procedure for physically tracking assets. The creation of preliminary inventory records is an automatic part of the invoice payment process for equipment acquired with OSU-administered funds on Banner FIS.

 

Policy

Individual departments may purchase equipment using state, sponsored, affiliated foundation pass-through, and auxiliary funds. Regardless of the source of funds, all purchases must be made in accordance with applicable federal and state law and Oregon University System and OSU policies.

Equipment acquisitions may be made by purchase, installment purchase, lease/purchase, lease, loan, gift, transfer, trade, or fabrication. The equipment may be new or used. The acquisition cost must be =>$5,000 per unit/item to be capitalized as equipment (40xxx account codes). All other movable equipment of a lesser amount will be accounted for as minor equipment (202xx account codes).

Allowable acquisition costs include any costs related to the obtainment and installation of the equipment such as the purchase price, shipping, and installation fees. Also, all costs related to the importation of equipment from foreign countries [such as entry fee, broker's fee, cartage fee, custom's bond, import service fee and custom duty fees] are allowable as part of the acquisition cost.

Unallowable costs include extended maintenance, warranties and training.

Software in the purchase of equipment which is separately itemized on a vendor invoice is not capitalized. This cost is expensed as 20202 "software."

Buy, Fabricate, Lease/Rent Policy
When determining the best method to acquire equipment, the following considerations should be made:

• The method chosen should be in the best interest of the University.
• The method chosen should be the most cost effective.
• The method chosen should not be used to circumvent normal procurement procedures.

Fabrication (assembly) of a Capitalized Unit
See PRO 210 for guidance on what constitutes a fabricated piece of equipment and specific approval procedures for fabricated units.

Ways of Acquiring Ownership (Title) of Equipment
OSU may acquire ownership of equipment in several ways including, but not limited to, the following:

1. purchase or fabrication of equipment using state, affiliated foundation flow-through, or auxiliary funds,
2. purchase or fabrication of equipment using federal or non-federal sponsored funds for which the award document states that OSU retains title upon receipt of the equipment,
3. purchase or fabrication of equipment using federal or non-federal sponsored funds for which equipment title is vested with the sponsor and subsequently transferred to OSU at the completion of the project,
4. donation of equipment,
5. lease/purchase of equipment after the lease/purchase option has been exercised. Normally, lease/purchase equipment is treated as university equipment when the first installment payment is made.

Ways of Acquiring Use of Equipment (not Title)
OSU may acquire the use of equipment, though not ownership, by receiving the following:

• government-furnished property (GFP), with title vesting with the government,
• loaned equipment, with title remaining with the lender, or
• purchased or fabricated equipment using federal or non-federal sponsored funds for which equipment title remains vested with the sponsor.

Purpose

To ensure that equipment purchases are made in accordance with applicable federal and state law; and Oregon University System and Oregon State University policies.

 

Applicability

All equipment (other than vehicles – see PRO 501: Vehicles) purchased with state, local, or sponsored funds for which title vests with OSU or the sponsor upon acquisition.

 

Policy

Equipment purchases using state, local, or sponsored funds must be made in accordance with applicable federal and state law and Oregon University System and OSU policies.   Equipment purchases over $5,000 must be made through the Purchasing department.  Use of the procurement card for purchases associated with account code 40199 Construction in Progress [Equipment] is allowable.

Departments may purchase equipment out of multiple indexes.  However, this practice is prohibited in two instances:

1. Equipment purchased by Service Centers and Auxiliaries must be funded solely by the unit and must be used solely in support of the service department for which it was purchased.
2. Equipment purchased on a grant or contract where the sponsor retains title, either fully or conditionally, must be purchased solely from that grant or contract.

Equipment Purchased with University or Sponsored Funds

Coding Requisitions
A departmental requisition must reflect the proper account code and must be used to classify purchases.  See GCG 204-02:  Cost Classification: Assigning Account Codes and GCG 205: Expenditure Account Codes in the Grant, Contract & Gift Accounting Manual because sponsors with grants and contracts may have a lower threshold for equipment purchases. 

Determination of Factors Affecting Installation or Use
The requesting department is responsible for determining all factors affecting the installation or use of equipment, including, but not limited to:

• utilities availability
• space requirements
• floor loading capacity, and
• building accessibility

Obtaining Approval for the Purchase of Used Equipment
Before purchasing used equipment, an individual must obtain approval from the department chair, dean, director, or designee. Approval may be given in a memo or as a statement on the requisition.

Capital Budget
Most purchases require equipment to be in an approved capital budget. If the equipment is not budgeted, the supervisor’s or sponsor’s approval may be necessary before purchasing.

Equipment Purchased with Sponsored Funds

See PRO 902-02: Ordering, Receiving & Tagging.

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Procedure

Equipment Costing $5,000 or More (General)

Responsible Party	Action
Department:	Prepare a departmental requisition, obtain necessary approvals and send the document to the Purchasing department using the appropriate transaction account code: 40101  Equipment 40102  Livestock 40103  Art/Museum Collections 40104  Vehicles 40199  Asset under Construction 40201  Vessels
Purchasing Department	Ensure document is prepared properly. Solicit bids or quotes on the item from vendors. Prepare purchase order in FIS Banner on commodity level accounting.
Department:	After receiving equipment (see PRO 301), process the invoice in FIS Banner. Include appropriate information in the text field for the asset record.  See PRO-EX1: Creating an Asset Record from a Banner Invoice.
Property Management	Create asset record from invoice information and sends department a bar code tag for equipment.

Equipment Costing $5,000 or More (Service Centers and Auxiliary)

Responsible Party	Action
Department	Equipment purchases are an exchange of a capital item (cash) for a capital item (equipment).  Prepare a departmental requisition, obtain necessary approvals and send the document to the Purchasing department. Note: Process Purchase Orders and Invoices on an operating index using account code 40199, 'Asset Under Construction.'
Purchasing Department	Ensure document is prepared properly. Solicit bids or quotes on the item from vendors. Prepare purchase order in FIS Banner
Department	Process payment for new asset on an operating index and capital account code 40199. A journal voucher is submitted simultaneously moving the expense from the operating index and 40199 to the unit’s fund code and using the appropriate capital asset account code: A8011   Capital Equipment A8012   Vehicles A8015   Vessels A8031   Collections A8032   Works of Art and Historical Treasures A8042   Library Books (General) The journal voucher number should be referenced on the invoice's text, and vice versa. The journal voucher should contain the necessary information to create the asset record. See PRO-Ex2: Completing a Journal Voucher.
Property Management	Create asset record from journal voucher information and sends department a bar code tag for equipment.

NOTE:  See PRO 401: Depreciation of Equipment for additional information when replacing existing equipment.

Equipment Costing $5,000 or More Purchased with Agricultural Research Foundation (ARF) or OSU Foundation (OSUF) Funds

Responsible Party	Action
Department	Prepare a departmental requisition, identifying the funds to be used and appropriate transfer index, obtain necessary approvals and send the document to the Purchasing department.
Purchasing Department	Ensure document is prepared properly. Solicit bids or quotes on the item from vendors. If applicable, prepare purchase order in FIS Banner. Note: Departments do not have delegated authority to make purchases over $5,000 unless approved by the Purchasing Department, regardless of the source of funds.
Department	After receiving equipment (see PRO 301), process the invoice in FIS Banner or submits check request to ARF or OSUF. If Banner is used, then include appropriate information in the text field for the asset record.  See PRO-EX1: Creating an Asset Record from a Banner Invoice. If Banner is not used, then submit a Fixed Asset Data Entry (FADE) form to Property Management including a copy of the invoice and the check request.  FADE forms are available on the Inventory Control website.  See PRO-Ex3 for a sample FADE form.
Property Management	Create asset record from invoice information and sends department a bar code tag for equipment.

 

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Cross Reference

See the Procurement and Contract Services (PaCS) Website for more information on purchasing requirements.

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Additional Information

Automatic-pay vendors
Due to a high volume of OSU purchases, certain vendors have been designated "automatic pay" by Accounts Payable. They submit invoices directly to Accounts Payable, where they are input and paid without routing to departments for approval. The expense is then distributed to departmental indexes using journal vouchers. Accounts Payable makes every effort not to use automatic payments for equipment expenditures-such invoices, when identified, are forwarded to department accounting personnel for payment through the regular Banner invoice process.

To assist Accounts Payable in making that identification, the person making the purchase should give the vendor the 40101 account code along with the Banner index code to be charged. Despite all efforts, we recognize that the information will not always get to the vendor, nor will it always get from the vendor to Accounts Payable. Department accountants should review automatic payments as they occur and enter journal vouchers to correct any incorrectly coded purchases.

Oregon State University VISA procurement card purchases
The VISA procurement cards may not be used for the purchase of equipment or equipment upgrades. VISA instructions detailing the restrictions on individual purchases, etc. are supplied with each card. Please refer to these for further information.

Wire Transfers
Wire transfers do not create an origination tag in the fixed asset module.  If a payment must be made via wire transfer, use account code 40199 and a journal voucher to redistribute to the appropriate transaction code.

Multiple Invoice Function in Banner
The multiple invoice function in FIS Banner under FAAINVE does not create an origination tag in the fixed asset module.  If a payment must be made via the multiple invoices function, use account code 40199 and a journal voucher to redistribute to the appropriate transaction code.

Purpose

To allow the purchase of equipment through installment purchases.

Background Information

Installment-Purchases may be desirable to extend the payout of capital Purchases over time instead of lump sum purchasing. However, installment-purchases are avoided because of the additional costs incurred in the form of interest.

Policy

Departments are permitted to make installment purchases of equipment, regardless of the funding source. All installment purchases must be approved by the Procurement and Contract Services (PaCS) group. Installment purchases/financing in excess of $100,000 require that the financing be acquired separately from the equipment through a third-party financing bid administered by the State of Oregon Department of Administrative Services (DAS).

An installment purchase made with grant funds must have the purchase (payment of installments) completed within the time period of the grant. (If a grant is for 3 years and equipment is purchased on an installment plan in the first month of the grant, then the payment schedule cannot be longer than 36 months.)

The Installment purchase option should not be used when the ownership of the equipment is Federally-Owned (FN) or Other-Owned (OI).

Title to the equipment passes to OSU with the first payment. The first payment is usually coded "equipment," and the item is added to inventory at its full value (total of all principal payments) at the same time. The remaining payments are coded "principal installment payments" and "interest expenses" as appropriate (see PRO-Ex10: Account Codes).

Procedure

Installment Purchases - General Fund Transactions

Responsible Party	Action
Department	Complete and submit a requisition for the proposed installment purchase of equipment to PaCS.
PaCS	Ensure requisition is properly completed. Solicit bids or quotes on the item from vendors. Select vendor and create purchase order. Notify Business Affairs of approved installment purchase and market value of purchased assets.
Department:	Receive equipment and invoice. Process FIS Banner invoice: Code the initial payment as 40101 to initiate the inventory record, exclusive of any interest. Add text: (1) providing the inventory information for the creation of the asset record, and (2) noting the market value of the purchased asset. Code the subsequent payments as 40113: Installment-Purchase, with the interest portion coded 28810: Interest Expense. Each payment should reference the inventory number assigned to the asset, either on the description line or in the text field (e.g., Monthly payment on copier, FA#315062.) Note: Business Affairs will adjust the Installment purchase liability for Non-Proprietary Funds.
Property Management	Create asset record and send bar code tag to department.

Installment Purchases - Service Centers and Auxiliary

Responsible Party	Action
Department	Complete and submit a requisition for the proposed installment purchase of equipment to PaCS.
Purchasing Department	Ensure requisition is properly completed. Solicit bids or quotes on the item from vendors. Send a copy of the signed leased agreement to Business Affairs. Initiate purchase order in FIS Banner using operating index and account code 40199 for the asset and 28810 for the interest expense.
Department	Department receives equipment and invoice. Simultaneously process a FIS Banner invoice and a FIS Banner Journal Voucher. Process a FIS Banner invoice for initial payment using operating index and account code 40199 for asset portion and 28810 for interest. Then liquidate balance of PO. Process a FIS Banner Journal Voucher to book the asset and the liability incurred: Debit A8011 for the full value of the asset, Credit operating index and account code 40199 for portion paid on initial invoice, Credit B2102 for the balance of the principal, Add appropriate text (See PRO-Ex2: Completing a Journal Voucher) Example: PO processed for $20,000 asset paid over 24 months with 5% interest. Total PO equals $21,000. Initial invoice pays: Index/40199 $833.33 Index/28810 41.67 Journal voucher is processed: Dr: Fund/A8011 $20,000.00 Cr: Index/40199 833.33 Cr: Fund/B2102 19,166.67 Process remaining payments to vendor (to reduce liability) on department fund and account code B2102. Interest expense should be processed against unit's index and account code 28810. Each payment should reference the inventory number assigned to the asset, either on the description line or in the text field (e.g., Monthly payment on copier, FA#315062.)
Property Management	Create asset record from journal voucher information and sends department a bar code tag for equipment.

Purpose

To allow the purchase of lease/purchase equipment.

Background Information

Lease-Purchases may be desirable to extend the payout of capital Purchases over time instead of lump sum purchasing. However, lease-purchases are avoided because of the additional costs incurred in the form of interest.

Definition

A lease/purchase or capital lease has at least one of the following characteristics:

1. Ownership of the property passes to OSU at the end of the lease;
2. The lease contains a lease/purchase option;
3. The lease lasts for 75 percent or more of the useful life of the equipment;
4. The total of all lease payments (excluding insurance and maintenance costs) is greater than or equal to 90 percent of the fair market value of the equipment.

Policy

Lease/purchase equipment may be purchased using installment payments over a period of five years or less. Lease/purchase agreements must be approved by the OSU Contracts Office. Lease/purchase equipment is "conditionally owned" (title code CI) until the final payment is made and the department exercises the option to purchase.

When the final payment is made, the department notifies Property Management. The inventory record is then corrected to show "purchase" rather than "lease purchase" for the acquisition method, and the title code is corrected to SI. If the option to buy is not executed, the asset is returned to the vendor and a PDR should be submitted to remove it from inventory

Acquisitions Involving Federal Funds
If federal funds are involved in the acquisition of equipment for lease/purchase, the principal investigator must first determine that the source of funding allows for leasing.

Procedure

Lease Purchases (General)

Responsible Party	Action
Department	Complete and submit a requisition for the proposed lease purchase of equipment to Purchasing.
Purchasing	Ensure requisition is properly completed. Solicit bids or quotes on the item from vendors. Send a copy of the signed leased agreement to Business Affairs. Initiate purchase order in FIS Banner.
Department	Department receives equipment and invoice. Process FIS Banner invoice: Code the initial payment as 40101 to initiate the inventory record, exclusive of any interest. Add text: (1) providing the inventory information for the creation of the asset record, and (2) noting the market value of the purchased asset. Code the subsequent payments as 40113: Installment-Purchase, with the interest portion coded 28810: Interest Expense. Each payment should reference the inventory number assigned to the asset, either on the description line or in the text field (e.g., Monthly payment on copier, FA#315062.) After final payment is made, the department notifies Property Management and Business Affairs.
Property Management	Correct the inventory record to reflect, "purchase" rather than "lease purchase" for the acquisition method, and the title code is changed from CI to SI. If the option to buy is not executed, the asset is returned to the vendor and a PDR should be submitted to remove it from inventory.

Lease Purchases (Service Centers and Auxiliary)

Responsible Party	Action
Department	Complete and submit a requisition for the proposed installment purchase of equipment to PaCS.
Purchasing Department	Ensure requisition is properly completed. Solicit bids or quotes on the item from vendors. Send a copy of the signed leased agreement to Business Affairs. Initiate purchase order in FIS Banner using operating index and account code 40199 for the asset and 28810 for the interest expense.
Department	Department receives equipment and invoice. <!--[endif]--> Process FIS Banner invoice for initial payment using operating index and account code 40199 for asset portion and 28810 for interest. Then liquidate balance of PO. <!--[endif]--> Simultaneously process a FIS Banner Journal Voucher to book the asset and the liability incurred: Debit A8011 for the full value of the asset, Credit operating index and account code 40199 for portion paid on initial invoice, Credit B2102 for the balance of the principal, Add appropriate text (See PRO-Ex2: Completing a Journal Voucher) Example: PO processed for $20,000 asset paid over 24 months with 5% interest. Total PO equals $21,000. Initial invoice pays: Index/40199 $833.33 Index/28810 41.67 Journal voucher is processed: Dr: Fund/A8011 $20,000.00 Cr: Index/40199 833.33 Cr: Fund/B2102 19,166.67 Process remaining payments to vendor (to reduce liability) on department fund and account code B2102. Interest expense should be processed against unit's index and account code 28810. Each payment should reference the inventory number assigned to the asset, either on the description line or in the text field (e.g. Monthly payment on copier, FA#315062.) 10. After final payment is made, notifies Property Management and Business Affairs whether or not equipment will be retained or returned to vendor.
Property Management	Correct the inventory record to reflect, "purchase" rather than "lease purchase" for the acquisition method, and the title code is changed from CI to SI. If the option to buy is not executed, the asset is returned to the vendor and a PDR should be submitted to remove it from inventory.

Cross Reference

For information on buying or leasing capital equipment, see the Procurement and Contract Services (PaCS) Website.

Purpose

To identify the responsibilities associated with leased or rented equipment.

Background Information

An operating lease allows the acquisition and use of equipment in a quickly changing technological area while avoiding ownership of equipment that may become obsolete.  

For Service Centers and Auxiliaries, operating leases permit the use of equipment without the obligation to own and fund reserves and steady the operational cash flow and associated expense reports.

Definition

Lease

An agreement for the right to use property for a specified period at a specified cost.  Title remains with the lessor.  At no time does the lessee build equity in the property.

Policy

All lease agreements must be approved by the OSU Contracts Office.  The lease agreement should specify whether or not OSU is responsible for insuring the equipment.  OSU assumes no responsibility for leased or rented equipment unless a responsibility is specifically stated in the contract or written agreement.  Only then does OSU insure the equipment against theft or damage.   Property control, security, and administration of the equipment are the lessor’s responsibility.

Procedure

Responsible Party	Action
Department	Draft a lease agreement and forward official document to the Contracts Office for approval. Submit copy of approved lease agreement to Business Affairs. If lease requires OSU to insure equipment and the asset will be held less than 90 days, a copy of the agreement should be forwarded to OSU Risk Management.  (Item will be covered under supplemental insurance.) If lease requires OSU to insure equipment and the asset will be held more than 90 days, the asset must be added to inventory.  A copy of the agreement should be forwarded to Property Management along with a Fixed Asset Data Entry form.  See PRO-Ex3: Fixed Asset Data Entry (FADE) form. Lease payments are coded "equipment-rentals and leases" (see PRO-Ex10: Account Codes).
Purchasing	Add leased equipment to the university asset records at its replacement value for tracking and insurance purposes.
Department	When lease ends and equipment is returned, the department will submit a PDR to remove the equipment from inventory.

Purpose

To identify and record equipment loaned to OSU.

Background Information

Personal property brought on campus for the convenience of the employee and not required for institutional purposes will not be insured against loss or theft by OSU (paintings, pictures, stereos, etc.).  Property not under the specific control of the University will not be insured.

Definition

Control

Having the legal ability and responsibility to (i) direct the property's use and location, (ii) direct who may have access to it, and (iii) take possession of it.  State control cannot exist when the property is in the possession or control of the owner and the owner is not the state. 

Policy

Equipment may be loaned to OSU by individuals, organizations, institutions or research project sponsors.   Oregon State University assumes no responsibility for equipment on loan unless the user has submitted a Personal Property Loan Agreement form to Property Management.  If the form is not submitted, the Oregon Department of Administrative Services (DAS) Risk Management Division may not insure the equipment.  Property Management must approve all Personal Property Loan Agreements.  Loan agreements must be for a finite period of time not to exceed five years.

Faculty and staff members who use their personal equipment at university facilities do so at their own risk and are responsible for marking their property to indicate ownership. 

Departments may receive equipment loans from organizations or institutions with their own standard loan agreements.  All such loan agreements must be forwarded to the OSU Contracts Office for review.  Departments may only enter these agreements with the written approval of the Contracts Office.  Once approval has been obtained, the property is accounted for on the inventory and the agreement is filed at Property Management.

Some equipment is loaned by an agency or organization for use on a sponsored research project.  If the loaned equipment is from the sponsoring agency, we usually call this equipment "agency-owned."  Risk Management will insure sponsor-furnished property or government-furnished property.  See PRO-Ex11: Types of Federal Property for details.

When equipment loans accompany a PI from another university, these agreements must be documented and written approval must be obtained from Property Management.  When these agreements are in the form of contract modifications, the original copy is kept in Contract Administration.  For additional information, see PRO: 701: Loaned Equipment.

Procedure

Property Loaned for 90 Days or Less

Responsible Party	Action
Borrowing Department	Complete and submit a Personal Property Loan Agreement form to Property Management.
Property Management	Review loan agreement.  If approved - forwards it to risk Management. If not approved - returns agreement to department with deficiencies noted.
Department	Record loan under supplemental insurance policy.

Property Loaned for More Than 90 Days

Responsible Party	Action
Borrowing Department	Complete and submit the Personal Property Loan Agreement and Fixed Asset Data Entry forms to Property Management.
Property Management	Review loan agreement.  If approved - create fixed asset record and file the form and loan agreement.    If not approved - return to department with deficiencies noted.

Additional Information

See the DAS Risk Management website.

Purpose

To properly record gifts acquired by the University.

Background Information

Individuals, corporations or other organizations sometimes donate equipment to OSU.  The OSU Foundation is responsible for OSU gift administration, gift recognition, and IRS tax forms.

Policy

Any gift or donation acquired by or given to the University must be reported to the OSU Foundation for the purposes of acknowledging the gift and issuing an official OSU gift receipt.

Please report all gifts in writing to the OSU Foundation. Include the following information:

• name, address, and social security number or tax ID number of the donor;
• fair market value (FMV) of the gift;
• purpose of the gift;
• name and title of the staff member in charge of the gift; and
• a copy of the gift letter and/or any other documents furnished by the donor.

The IRS requires that any gifts that are disposed of within three years of receipt have an additional tax form (8282) filed with the IRS; departments are advised to keep gift equipment for at least three years.

All gifts meeting the equipment definition should be added to inventory immediately.  The true market value of the gift should be ascertained by a formal appraisal at the time of transfer of ownership.

Antiques, or personal property received from noted alumni, and Assets gifted to the University that may have historic significance to OSU or the State of Oregon should be reviewed for possible inclusion in the Historic Properties register.  Property Management should be contacted if an item of possible interest is received.

Booking Gifts as Revenue
OUS has instituted a new policy requiring that tangible property (gifts-in-kind) donated to the university must be booked as revenue.  To facilitate the appropriate entries to the General Ledger, the OSU Foundation will send Property Management a monthly listing of all gifts-in-kind (capital and non-capital) received on behalf of OSU.  Property Management will contact individual departments requesting additional information on any item that appears to be a capital asset, and will process the journal voucher to book these gifts as required.

Prohibited Gifts and Gratuities
University employees shall not accept or solicit, directly or indirectly, anything of economic value as a gift, gratuity, favor, entertainment, or loan that is or may appear to be designed to influence official conduct in any manner, particularly from a person who is seeking to obtain contractual or other business or financial arrangements with the university (e.g., a vendor who has interests that might be affected substantially by the performance or nonperformance of the employee’s duty).

Such persons include both present and potential suppliers and contractors to the university and agents working on behalf of suppliers and contractors.

Procedure

Property Loaned for 90 Days or Less

Responsible Party	Action
Department	Receive equipment and letter of acknowledgement (gift letter) from donor. Submit acknowledgement letter and Gift-in-Kind form to the OSU Foundation for tax acknowledgement. Submit photocopies of all documentation (gift letter, appraisal, Gift-in-Kind form, etc.) along with a completed Fixed Assets Data Entry form to Property Management.
Property Management	Create asset record in FIS Banner and sends bar code tag to department.

Additional Information

See the OSU Foundations website for related information on Gifts.

Purpose

To identify and record equipment transferred from other institutions and agencies to OSU.

Policy

Individuals must notify Property Management of equipment transfers from another institution or agency to OSU.  Unless otherwise stated, title of equipment vests with the University at the time of the transfer.

Equipment transferring to OSU from other institutions with new faculty should be reviewed and documented IMMEDIATELY upon receipt.  This type of property becomes state property (not personal property of the principal investigator) and must be added to the inventory in order to be tracked and insured.

Equipment that is accountable to a sponsor award that is transferring to OSU must be documented immediately, including information on the index and sponsor ID assigned by the Office of Post Award Administration.

Procedure

Transfer of Equipment Into OSU

Responsible Party	Action
Department	Request the following written information from the transferring institution: current market value, age, description, serial number, funding source, condition and federal accountability. Submit Fixed Asset Data Entry form to Property Management along with any backup documentation from the transferring institution or agency within 30 days of receipt. Note: If the transferring institution cannot provide the market value, a certified appraiser must appraise the equipment.  Contact Property Management for assistance with appraisals.
Property Management	Create asset record in FIS Banner and sends bar code tag to department.

Transfer of Grant or Contract Accountable Equipment to OSU

Responsible Party	Action
Department	Request the following written information from the transferring institution: current market value, age, description, serial number, funding source, condition and federal accountability. Submit Fixed Asset Data Entry form to Property Management along with any backup documentation from the transferring institution or agency within 30 days of receipt, including information on the award designation to OSU. Note: If the transferring institution cannot provide the market value, a certified appraiser must appraise the equipment. Contact Property Management for assistance with appraisals.
Property Management	Create asset record in FIS Banner and sends bar code tag to department.

Purpose

To define a procedure for the trade-in of university/sponsor owned capital equipment.

Policy

Units are permitted to trade all or part of an asset to reduce the cost of a new asset.  All trades require prior approval from Property Management and must  be fully documented in FIS Banner.  Items acquired by trade are capitalized at their full value, not the amount after it was reduced by a trade-in allowance.  Please see PRO 803: Trade-in of Equipment for additional information on trade transactions.

Procedure

Exchange of an older piece of equipment for a reduction in cost on a new asset.

Responsible Party	Action
Unit	Contact Property Management (via phone or email) to request approval for the proposed trade. Submit to Purchasing within the appropriate Business Center: A Departmental Requisition and vendor quote of the item to be obtained. A Property Disposition Request (PDR) form containing the following: The asset(s) to be traded. Note under ‘resale price’ the credit that is to be received from the vendor for the traded asset(s). A description of the item to be received for the traded item. Note: If multiple assets are being traded there must be a specific amount for each asset – not a lump sum for all.
Purchasing	Set up the Purchase Order in FIS Banner to reflect the full value of the new asset (including, rather than less than, the value of the trade-in credit). There should be a text notation on the Purchase Order regarding the amount of credit to be received from the vendor. Purchasing will provide a copy of the PO as well as the original PDR to Inventory Control to keep on file until the asset is received and payment processed.
Business Center	Process the invoice for the new asset for the full amount of the asset (including trade-in credit) even though the invoice from the vendor will probably be reduced by the value of the trade-in allowance.  In order to pay the correct amount, a credit memo must be created in Banner for the amount of the trade-in allowance.  Be sure to process the invoice and credit memo simultaneously (cross-referencing the document numbers in the text field of both). This allows the proper payment to the vendor. Set up the credit memo for the amount of the trade-in, and posted to fund 095880 Asset-Undistributed Income Clearing and Account Code B5801 Undistributed Income.
Property Management	Create the new asset record from the Origination tag created by the invoice. Then the disposition of the traded asset will be processed in the Fixed Asset module under the ‘sale of asset’ function. This function will take the ‘proceeds’ of the sale (the credit amount in the undistributed clearing account from the credit memo) and return it to the appropriate departmental fund. This process allows the proper recording of the gain or loss on the disposal of the traded-in asset. Gain or loss will only be posted to 09XXXX Service Center and 1XXXXX Auxiliary funds.
Exception: If the traded item is not a capital asset, this process cannot be used as there is no way to return the proceeds (credit) to the unit through the ‘sale of asset’ function. In this case, the credit memo should reflect the same index as the invoice and use account code 06981 Sale or Trade-In of Assets to reduce the payment to the vendor. The new asset will be recorded on inventory at full value.

One-to-One swap of equipment with no dollars changing hands.

Responsible Party

Action

Department

Request permission from Property Management to trade an asset. Obtain the current market value of the asset being received.  (May require services of a certified appraiser.) Use current market value as its inventory value, if it meets the capital threshold. A letter documenting and justifying the swap should be sent to Property Management with a PDR to remove the traded asset from inventory and a Fixed Asset Data Entry form with information to add the received asset to inventory.

Purpose

To outline procedures for fabrication (assembly) of a capitalized equipment unit.

Definition

Fabricated Unit

Transformation of materials (supplies and minor equipment) into an identifiable unit by fabrication and meets the following criteria:

1. Total finished value =>$5,000 and has a useful life of > 1 year.
2. The ownership or title-to code must be the same for the entire fabricated unit. Funding sources can not be mixed so part of the fabricated unit is owned by the Federal Government or another outside entity and the remaining part(s) is owned by the university.
3. Free standing, movable as an entire unit, not permanently attached to a structure, and will not lose its identity when installed in other property.
4. Unit must be complete in itself. It will be added to, accounted for, and removed from capital inventory as one unit or record. All pieces stay together until entire unit is surplused.
5. Assembled parts must be integrated, permanently attached to each other, and essential in the performance of the unit. A basic schematic diagram with a description must show how the parts are integral to the unit.
6. A fabricated unit with all assembled parts must be physically found in one location at all times. Parts which do not meet this requirement are considered individually for capitalization.

Policy

Fabricated, assembled or constructed equipment that meets the above definition will be capitalized and added to the equipment inventory. The faculty member and department will be responsible for pre-approval prior to purchasing of any parts or items for the fabricated unit. This includes a basic schematic diagram of the proposed fabricated unit with explanations of the integration of the parts (see Procedures section).

Costs to assemble or fabricate can include parts, shipping costs, and labor of an organized shop. Faculty time may not be included. Donated parts will be recorded at fair market value. (See Procedures below for details).

Network and communication wiring can not be capitalized as equipment. This is infrastructure and special rules apply. Contact Property Administration if you have questions concerning these costs.

Software that is leased or licensed for use and which is separately itemized on a vendor invoice can not be capitalized. Do not include this expense in a fabricated unit cost.

Replacement parts:
Once a fabricated unit has been initially completed and placed in service, all replacement items, parts, or pieces to upgrade or enhance the unit will be expensed.

Example: a battery is replaced with a more powerful battery. The new battery must be purchased as an expense using Account Code “23501 Equipment Maintenance & Repairs”. [Note: the original battery remains on inventory and depreciates as part of the fabricated unit.]

Prototype fabrications:
OSU may receive special grant or contract funding to assemble and test a specialized piece of equipment which has not been previously constructed. These prototype units are unique experimental pieces of equipment which are designed for a specific purpose. There is a testing period. Even though on the fixed asset inventory as an asset, the unit should not be coded as “in-use” until the testing period is completed or the end date of the grant/contract; which ever comes first. If the item is found to be non-functional after the testing period, it must be removed from inventory.

Removal of a fabricated unit from fixed asset inventory:
When a fabricated unit is no longer in-service as it was designed and the department wants to surplus the parts or use some of them for another purpose the asset record must be removed from the fixed asset inventory and any remaining depreciation expensed to the university. These parts can not be added back to inventory as a single asset or part of a newly fabricated unit.

Procedure

Transfer of Equipment Into OSU

Responsible Party	Action
Faculty Member & Department	Prepare Fabricated Equipment Unit Pre-approval form and basic schematic diagram with an explanation of the integration of the parts. Present the completed, signed form and schematic diagram to OSU Property Administration (Business Services) for review and approval. Property Administration will review the application within 24 hours of receipt. a. If the cost of the fabricated unit is part of a sponsored proposal, the approved form and schematic should accompany the Proposal Transmittal Form presented to Office of Sponsored Programs and Research Compliance (OSPRC). b. If the fabricated unit is to be funded with Research Equipment Reserve Funds (RERF), the approved form and schematic must accompany the funding application to the Research Office for approval by the Research Council. c. If the fabricated unit is to be funded with other funding, the approved form is to be maintained at the department business office. Once funding is approved, Purchase Requests may be processed. A copy of the approved Fabricated Equipment Unit form (with the funding indexes noted) with the basic schematic diagram attached should accompany the first Purchase Request to the PaCS office. Begin fabricating the unit. (Note: approval is required when using sponsored funds. On the grant index, look for a dollar amount budgeted as account code 40101 Equipment.) a. Process all vendor invoices using account code 40199 for all parts associated with the construction of the unit. b. External shop labor invoices should be processed using account code 24995 Construction Contract Services due to IRS 1099 reporting requirements for services received. After processing these invoices through Accounts Payable, complete a Journal Voucher (JV), with the appropriate text, to change the account code to 40199. c. If fabrication includes OSU shop labor, prepare a Journal Voucher (JV) to debit account 40199 on the funding source and credit account 79343 on the shop index. When fabrication is complete or at fiscal year-end, whichever comes first, costs must be redistributed by JV from account code 40199 to account code 40101 so the asset record can be created. The text field of the JV must have the necessary information to create the asset record, including the original “I” doc numbers. The asset will be capitalized as a CIP (Construction in Progress) unless it is completed and in-use. [See FIS 601 Equipment for additional reference.] If the asset is “CIP” (Construction-in-process), any additional costs in the new fiscal year should continue to be processed on account code 40199 and converted to account code 40101or A80xx for an auxiliary or service center at completion or fiscal year-end. When construction is complete and the asset is in use, process a final journal voucher to convert any remaining costs from account code 40199 to the equipment account code 40101. Include the in-service date in the text of the JV. All modifications after asset is placed in service must be expensed.
Property Management	Receives the Fabrication Equipment Unit Pre-approval form and basic schematic diagram from the faculty member/department. Reviews and returns the pre-approval form within 24 hours of receipt. Retains a copy for future reference. Approves Journal Vouchers which move costs from account code 40199 to account code 40101 or A80xx. At fiscal year-end, creates the capital inventory record as “CIP” until the unit is placed in-service or use. Issues a Bar Code Tag to the department for the fabricated unit. Requests a detailed update annually from the department for all assets that are still coded “CIP."

Purpose

To facilitate the reuse and acquisition of excess OSU, State and Federal property. 

Definition

Surplus Property

Property not needed by a department within the University. Surplus property includes all excess items and materials other than items that would be typically disposed of in a wastebasket, such as scrap paper, consumed pencils and pens, etc.

Background Information

OSU Surplus Property
OSU departments have access to a variety of used equipment. OSU Property Management staffs the Property Services warehouse at the corner of 13th and A streets in Corvallis, where departments may purchase OSU surplus equipment and supplies.

State Surplus Property
The Oregon Department of Administrative Services (DAS) in Salem offers state and federal surplus property for sale to state agencies.  Information on this program may be found on the DAS State Property Program website.

Federal Surplus Property
The Oregon Department of Administrative Services (DAS) has a property screener to assist state agencies in locating, reviewing and acquiring property from other federal sites as well as from the Salem depot.  Information on this program may be found on the DAS State Property Program website.

Federal Excess Property
Nationwide, the federal government also makes federal excess property available for use on federally-sponsored programs such as research projects, Agricultural Experiment Stations, etc.

Policy

Departments may purchase surplus property for university and sponsored use from the OSU Surplus Property Department and Oregon Department of Administration’s Services Surplus Property Management Office. 

Procedure

Acquisition of Used Equipment

OSU Surplus Property

1. Departments may purchase available surplus property at the Surplus Property warehouse on SW 13th and A streets in Corvallis, Oregon.
2. General fund indexes may only be used (no federal grant/contract indexes may be used).
3. Purchases can be made during regular business hours, except during closed periods prior to public auctions.  See the current sales schedule on the OSU Surplus Property Website.  Additional information is available at the Property Surplus website.

State Surplus Property

State surplus equipment acquisitions of less than $5,000 are considered minor equipment.  Acquisitions costing $5,000 or more must be inventoried.  If processed on a FIS Banner invoice, see PRO-Ex1: Creating an Asset Record from a Banner Invoice.  If not processed through FIS Banner, see PRO-Ex3: Fixed Asset Data Entry (FADE) Form.

Departments have two options for reviewing and acquiring Surplus Property through DAS in Salem, Oregon.

Option (1) The OSU employee can bring a letter of authorization (from their Department) to purchase items on a single day.  The letter may be either a general authorization to purchase any item or restricted to specific items.  The letter must be signed by an authorized representative of OSU.  Authorized signers for OSU are:

• Mark McCambridge, Vice President for Finance& Administration
• Brian Thorsness, Director - Property, Contract & Risk Management
• Patsy Hendricks, Surplus Property Supervisor
• Bil Burton, Equipment Systems Specialist

Option (2) An OSU employee can get permanent authorization to go to DAS by completing three forms found on the DAS State and Federal Surplus Property website. 

• Application Return Checklist
• Application for Eligibility
• Certifications & Agreement form
• Return Policy Agreement form

Click on "Eligibility" and then "State Agency, Boards & Commissions" to locate the forms.  These forms must be completed in advance, signed by the employee’s supervisor or Department Chair, and returned to DAS prior to the visit.  If an individual who is not on the application for eligibility wants to go to DAS, she or he may hand carry a letter from an eligible person.  If an item is purchased, the letter is attached to the DAS invoice.

Federal Surplus Property

Federal surplus property is recorded in a similar manner; however the "cost" of federal surplus property is really a handling fee from DAS rather than a capital expense-the property is donated to the state of Oregon by the U.S. General Services Administration. 

Departments may acquire property through this program or through other screeners who are certified to review and acquire surplus property for the state (contact Property Management for details).  In either case, the donation is coordinated through DAS, and a 5% or 6% fee is levied to pay for their handling costs.

Federal surplus property must be put in use for the purpose for which it was donated within one year of donation, and be kept in use for 12 months (18 months for vehicles and property with original acquisition cost of $5,000 or more).  If these terms are not met, possession reverts to DAS.  During this restriction period, title to the equipment vests with the federal government.

Federal Excess Property

Such property remains titled to the federal government and is considered "government furnished equipment" on loan to the university.  Title never reverts to the university.  Disposal of Federal Excess Property must be back to the original federal agency.  For details about Federal Excess Property acquisition and inventory, see PRO 900: Sponsored Research and Federal Property.

Additional Information

OSU Surplus Property website

State of Oregon Surplus Property website