Financial Rep MeetingJuly 13, 2011

PROPERTY CAPITALIZATION THRESHOLD CHANGE

MICHAEL WILLIAMS

What is the change?Current Definition of a Capital Asset –

Tangible personal property which has an acquisition value of $1,000 or more with an expected useful life of one year or more.

Effective July 1, 2011 the acquisition threshold increased to $5,000.

To what types of property does this apply? Includes:

◦ Tangible personal property, e.g. Furniture & equipment Artwork and historical treasures Motor vehicles and watercraft Musical instruments Software (on a per-user basis)

◦ Additions, improvements and other outlays that significantly extend the useful life of an asset

Excludes:◦ Library materials and books ($250 capitalization

threshold)◦ Buildings ($100K)◦ Internally generated intangibles, e.g. Software ($1

million)

What is the implementation plan? Purchase Orders created prior to July 1, 2011

◦ Property with a cost of $1,000-$4,999 with an asset profile attached will be corrected when the voucher is created.

◦ Property Accounting Services will monitor this process.

◦ Departmental Managers should review their ledgers and notify PAS if they discover a capitalized asset with a cost less than $5K.

Indirect Cost ◦ Sponsored project purchases of property with a cost of $1,000-

$4,999 will not incur F&A overhead charges for FY 2011-2012.

◦ All grant proposals should continue to use a $1K capitalization threshold for equipment budgets for FY12.

Budget◦ Budget Managers should take threshold change into account

when budgeting for OCO expenditures in FY12.

What is the implementation plan? (cont.) Property Management

◦ Property with a cost less than $5K received on or after July 1, 2011 will not be tagged, tracked or physically inventoried.

◦ Previously received property with an acquisition value less than $5K will be exempt from physical inventory.

◦ Departments will continue to be held accountable for property below the $5K threshold.

◦ Contact Property Accounting Services for assistance in tracking these items.

Financial Reporting◦ GL Account and Purchasing Category descriptions have been

updated to remove references to old capitalization threshold of $1,000

◦ Property capitalized prior to July 1, 2011 with a unit value under $5K will be retired and removed from inventory records in FY12.

Contacts Budget – Katie Martindale

◦ 645-7164◦ kmartindale@fsu.edu

Property Inventory – Julie Bickford◦ 644-9757◦ jbickford@admin.fsu.edu

Purchasing – Karen Gibson◦ 644-9729◦ kgibson@admin.fsu.edu

Sponsored Projects – Roberta McManus◦ 645-2485◦ rmcmanus@fsu.edu

Accounting – Donna Jarriel◦ 644-9429◦ djarriel@admin.fsu.edu