Scope:
Organizations with moveable capital equipment

Definitions:
Moveable Capital Assets are transportable equipment in the custody of Indiana University which have an acquisition value of five thousand dollars ($5,000) or more and a normal life expectancy of one year or greater.

Depreciation is the diminishing service, capacity, or utility of; the loss of usefulness of; or the wasting away of tangible asset during the periods of service life. The asset lives are linked to the asset type codes.

Asset Transfer refers to the change of account responsibility for an asset.

Procedures:

1. An asset retirement should only be processed when you no longer physically have the equipment. Fully depreciated assets remain on organization inventories until retired.
2. The account manager and the university’s Capital Assets office must approve the retirement document. Approval is also required from the campus’ Purchasing department for assets with a retirement of "gift" or "sold."
3. The campus IUPD case number is required when using the retirement reason of "theft."
4. Indiana University allows faculty members to transfer capital assets to another university or nonprofit organization with the proper approvals. Research equipment that costs $5,000.00 or more and is purchased from external funds is often considered special purpose due to the uniqueness of the project director's research. Therefore, the University will allow facility members leaving the University to take equipment purchased from research funds awarded to them so long as they are transferring to another education institution or nonprofit organization and so long as they receive approval from their department chair, dean, Research and the University Graduate School, and the Assistant Vice President for Research. Title to the equipment will be transferred to the new institution. Transfer of equipment purchased with University funds can be accomplished only with the reimbursement to the University for the greater of the net book value or fair market value of the equipment. If the items are fully depreciated the price will be 10% of the original purchase price. The external institution name is required when using the retirement reason of code [9]"external transfer." Refer to policy financial policy III-70.
5. The name of the person or the institution that received the gift is required when using the retirement reason of "gift."
6. The buying institution or individual’s name is required as well as the selling price when using the retirement reason of "sold."

Retirement Reasons:

Code	Reason	Description
E	Asset Created in Error	This retirement reason is used exclusively by the university’s Capital Asset office to retire documents created in error or to retire asset created that should have been expensed as supplies.
A	Auction	a) The campus' surplus departments use this reason to identify equipment sold at auction. b) When an asset is not transferred in a timely manner to surplus the department should also use the retirement reason of "A". This will allow us to accurately analyze surplus equipment.
5	Cannibalized	Parts of the equipment have been used to upgrade or repair other equipment. When equipment is cannibalized the IU tag number should be removed from the equipment.
C	Check Canceled	This retirement reason identifies assets that were created but were cancelled later.
0	Credit	Equipment that is returned to the vendor that the organization will receive a credit or a refund for which must be retired by the university’s Capital Asset office.
8	Destroyed	Equipment that is damaged beyond repair and has been disposed of by your organization.
4	Discarded	Equipment disposed of by specified guidelines set up by the university’s Purchasing department.
9	External Transfer	Retirement documents must be processed for equipment going to another university or nonprofit organization.
6	Gift	Equipment given to an external institution or organization. When giving away equipment, the organization must have the permission of their campus’ Purchasing department.
J	Journal Voucher	The Capital Assets office uses this code exclusively to indicate those assets retired by a journal voucher process.
3	Lost	Equipment should only be retired by this code after every effort has been made to locate the equipment.
M	Merged	This retirement reason is used to identify assets that have been merged into another asset.
1	Sold	University owned equipment may be offered for sale by the campus’ Purchasing department, or the organization may sell the equipment with the permission of their campus’ Purchasing department. The name of the buyer and selling price are required on the asset retirement document.
7	Theft	Theft of capital equipment must be immediately reported to the campus’ Police Department. The IUPD case number is required on the asset retirement document.
2	Trade-in	The organization retires equipment that was traded-in on a new purchase. The retirement document should be processed the new equipment is purchased. On the retirement document a note should be posted on the document that identifies the purchase order for the new equipment.

Example Transaction:
In the scenario below, International Services is retiring a laser printer.
Asset #: 90355
Description: Laser Printer

Payment Record

General Ledger Accounting Entries for Asset Retirement Document:

As a rule of thumb, retirement entries will only affect balance sheet object codes within the 95 Plant fund. The investment cost (capitalized under 86XX), the accumulated depreciation (recorded under 89XX,) and the loss (object code 4998) of the asset will be removed from the general ledger. Cash will not be affected by the retirement of an asset.

Pending Ledger Entries