Increase in Capitalization Threshold – July 1, 2011
Michael V. McKee, Assistant Vice President and University Controller
Effective July 1, 2011, the Florida Board of Governors created Regulation 9.002 related to the capitalization threshold for tangible personal property. The dollar value for capitalization is being increased from $1,000 to $5,000 for equipment, fixtures, and other tangible personal property of a non-consumable and nonexpendable nature. Also, Library resources with a cost of $250 or more and having a useful life of one year or more shall be recorded in the financial system as assets for inventory purposes.
The primary reasons for the change are (1) to reduce the administrative costs of recording and tracking items of equipment, and (2) to enhance overall stewardship and control of the University’s assets by eliminating the requirement to record and track relatively low valued items, so more attention and effort can be given to safeguarding the remaining, higher valued items.
How will this impact departments and Asset Management (AM)?
- Effective July 1, 2011, only those asset items with a cost of $5,000 or greater will be capitalized. Also, only asset items that are $5,000 or greater, excluding computing resources, will be required to be inventoried (a separate announcement will be made regarding tracking computing resources.) This should substantially reduce the amount of time and resources that AM and departmental staff must spend performing this important function. Assets with a cost of $5,000 or greater are required to be received in myUFL.
- UF’s Attractive and Sensitive Property Directive and Procedure has been amended and can be seen by navigating to: http://fa.ufl.edu/uco/handbook/handbook.asp?doc=1.4.9. Finance and Accounting will be working with the CIO’s office to further amend this Directive and Procedure to address computing resources.
- Effective July 1, 2011, any asset purchased having a value below $5,000 will be recorded as operating expense. These items can be purchased using your PCard as long as the purchase is not over the purchaser’s PCard purchasing limit. This includes purchasing computer equipment up to $2,000 on a PCard. All purchases must be in compliance with the PCard commodity rules.
- Computer equipment greater than $2,000 is still required to be purchased with a purchase order. These purchases will be recorded as operating expenses if they are below the asset threshold of $5,000.
- Assets encumbered over $1,000 and less than $5,000 as of June 30, 2011 that will be received during fiscal year 2012 will be expensed from your operating budget.
- For all purchases of assets after July 1, 2011 (this includes POs that will carryforward into next year), the following account codes should be used to properly identify and classify asset purchases at UF:739400 – FURN & EQUIP – > 1,000 and < 5,000 (Note – this is a new account)
781100 – FURN & EQUIP – CAPITALIZED
Please use account 739400 for all asset purchases between $1,000 and $5,000 no matter what type of equipment is being purchased.
For more information on this topic, see the Finance and Accounting Directives and Procedures located at: http://fa.ufl.edu/uco/handbook/handbook.asp?doc=1.4.9
For questions on this information please contact David Segura, Assistant Controller at email@example.com