Updates to Fixed Asset Policy: Capitalization Threshold Changes
Discover the latest updates to the fixed asset policy, including changes to capitalization thresholds effective from July 1, 2024. Learn about the increased threshold, grandfathering rules, and implications for active purchase orders. Stay informed to ensure compliance with the revised policy.
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Presentation Transcript
Fixed Asset Policy Updates January 30, 2024 Carrie Ballou Assistant Controller, Financial Reporting
Fixed Asset Policy Updates Capitalization threshold policy Depreciation methodology change 2 CLASP Monthly Research Administrators meeting January 30, 2024
Capitalization threshold policy Effective 07/01/2024, the capitalization threshold for purchases for the UR will increase Current threshold is $1,000 per unit cost Revised threshold will be $5,000 per unit cost Acquisition cost includes the following: Modifications, attachments, and accessories necessary for the asset s intended purpose Delivery, installation, and initial calibration of equipment included in capitalization cost SMH s (CM050) capitalization threshold increased 07/01/2022 to $5,000 per unit 3 CLASP Monthly Research Administrators meeting January 30, 2024
Capitalization threshold policy Active fabrications approved under the current threshold will be grandfathered at the current $1,000 aggregate cost Active fabrications approved under the current threshold will be grandfathered at the current $1,000 aggregate cost Fabrications requested after 07/01/2024 will be at the $5,000 aggregate cost 4 CLASP Monthly Research Administrators meeting January 30, 2024
Capitalization threshold policy Discussions around active purchase orders are pending Financial Reporting capitalizes fixed assets based on the accounting date of the invoice Purchase orders initiated on or after 07/01/2024 must take into account revised capitalization threshold for fixed asset purchases 5 CLASP Monthly Research Administrators meeting January 30, 2024
Capitalization threshold policy Effective 07/01/2024, all fixed asset purchases will use the new $5,000 threshold Indirect costs will be applied to expenditures for items with a purchase price of less than $5,000 billed on or after 07/01/2024 Fixed asset policy in process of being revised by Controller s office Majority of the UR s peer institutions are already at $5,000 capitalization threshold Lowers administrative cost of recording and tracking fixed assets 6 CLASP Monthly Research Administrators meeting January 30, 2024
Capitalization threshold policy Sponsored award project budgets Research administrators must follow up with sponsors to account for the capitalization threshold change to revise the budget for active awards and contracts Equipment purchases that were between $1,000 and $4,999 will be subject to indirect overhead costs effective 07/01/2024. UR will not provide additional funding to offset the capitalization increase as this is considered an accounting change 7 CLASP Monthly Research Administrators meeting January 30, 2024
Depreciation methodology change Effective 07/01/2024, all newly acquired fixed assets will be depreciated using a half year convention This change is being made to be consistent with SMH s methodology of depreciating assets on a half year convention in the first year the asset is placed into service 8 CLASP Monthly Research Administrators meeting January 30, 2024
Fixed Asset Policy Updates Questions? 9 CLASP Monthly Research Administrators meeting January 30, 2024
10 CLASP Monthly Research Administrators meeting January 30, 2024
