1. Capitalization of Moveable Equipment
2. Preparation of Requisition for Capital Equipment
3. EPIC CAMS Document

1. Capitalization of Moveable Equipment

   An item must meet two specific criteria in order to qualify as a capital purchase. It must have (1) an acquisition value of at least $5,000 and (2) a useful life expectancy of one year or greater.

   In some instances purchases of components can be capitalized together as one asset under moveable equipment, referred to hereafter as system assets. System assets are defined as components that work together to perform one function. These components must be necessary for the system to function as a whole. Removal of any one component would result in the system not operating at the required capacity or for the intended purpose.

   Departments will be required to complete a System Asset Attestation Form when it is difficult for the University Capital Asset Office to identify components as system assets. For example, if the component purchase were on a grant account and it was difficult for the University Capital Asset Office to identify the components as a system purchase, the System Asset Attestation Form will require the department to attest by signature that the items on the grant equipment list will work together to perform one function and that each purchased item is necessary for the system to function as a whole.

   Generally equipment that is attached to a building is capitalized as moveable equipment when removing the equipment does not cause structural damage to the building and will not destroy the equipment.

   The term "equipment" includes delivery equipment, office equipment, machinery, furnishings, factory equipment, and similar fixed assets¹.

   Acquisition cost of moveable equipment:

   1. Examples of service cost that can be capitalized with the equipment purchases may include:
      1. Cost of assembling the asset
      2. Cost of installation
      3. Freight
      4. In-transit Insurance
      5. Preparing the site and asset for its intended use
      6. Training
   2. When additional equipment is received on a purchase order at no cost, these items are considered gifts to the university. These gifts will be taken into consideration when assigning the unit cost of line items on the purchase order. The total quantity (including gifts) will be divided by the invoice amount. If the gift takes the unit cost below the capitalization threshold the expenses will be reclassified to supplies and expense object code.
   3. Assets are recorded net of cash, and other earned discounts. In addition a trade-in allowance will result in the reduction of the acquisition value.

   The following are not considered capital equipment regardless of cost or useful life:

   1. Repair or replacement parts. (See S&E object codes for example 4700- Repair & Maintenance or 4776 -Service or Support Maintenance Contracts.)
   2. An item or substance that has no shape or identity, or loses that shape or identify upon detachment or removal from its original location. (See S&E object codes for example 5200- Expendable Equipment.)
   3. Maintenance and Warranty agreements (See S&E object codes for example 4776 - Service Maintenance Contracts.)
   4. Software license agreements are not capitalized unless ownership is indicated within the license agreement. Software license agreements not indicating ownership should be expensed to object code 4616 - Computer Software Purchases.

   Capitalizing Modular Furniture:

   Modular Furniture is normally purchased in individual pieces on separate line items and then configured to make furniture. The normal practice will be to capitalize only those line items that meet the capitalization threshold.

   An exception can be made for organizations that want to capitalize modular furniture components under the $5,000 threshold. The components must create a furniture configuration for a given room location, and meet the $5,000 capitalization threshold. If your organization wants to capitalize modular furniture the line items must be assigned a capital object code. The organization must also indicate how many system assets they expect to be created, and the location. This information can be communicated to Capital Asset Management using the Capital Asset Information Collection Document. See section on "Purchasing a System."

   If no details are provided a General Error Correction will be processed to move the expense to an S&E object code.

   The organization will be responsible for inventorying the modular furniture assets. If the modular furniture asset is at some point reconfigured and components are surplused please contact your Campus Capital Asset Office. They will need to separate the components that are surplused to retire the asset(s). If the purchase order has been archived and is not accessible or you are unable to determine the line item cost of the components you may provide the Campus Capital Asset Office with a percentage of the cost to separate and retire. The modular furniture asset will remain as an active asset as long as the remaining cost meets the capitalization threshold.

   Any furniture items that are not modular and do not meet the capitalization threshold will be expensed as supplies and expense. Example a conference table costing $4,000.00 would not be capitalized.

   Mass purchases of furniture are not capitalized. Example the purchase of 100 beds with a unit cost of $700.00.

2. Preparation of Requisition for Capital Equipment

   When moveable equipment is purchased the Capital Asset Management System requires information regarding the capital asset category or the type of addition (new/payment.) This is accomplished by selecting a "CAMS Tran Type". In addition, information is required on how line items should be added together to create system assets. The "EPIC CAMS Document" is used to capture system and location information.

   CAMS Tran Type

   The "CAMS Tran Type" has four options (New, Modify Existing, Fabrication, and Capital Lease) available for capital equipment purchases. The "CAMS Tran Type" of "Capital Lease" is only presented as an option when a "Type of Recurring Payment" is selected. This selection is made on the "Payment Info" tab. When issuing a requisition the "CAMS Tran Type" can be accessed from the "Items" Tab. From the "Item" tab click on the line item "Edit" button.

   1. New
   2. Modify Existing
   3. Fabrication
   4. Capital Lease
   5. Services that can be capitalized
   1. New
      Select the "CAMS Tran Type" of New when you are purchasing a new capital asset. The transaction type of New will indicate to Capital Asset Management that the invoices should create new asset(s) in the university asset database. When line items will be added together to create a system asset, these line items should also be assigned the New CAMS Tran Type.
   2. Modify Existing
      The transaction type of Modify Existing is used to communicate to Capital Asset Management that the line item purchased is a component of an existing asset. An existing asset is an asset that has been previously created from another invoice, or purchase order and exists in the university asset database. The best test to determine if you need the Modify Existing is to ask (Will this line item be added to another PO, or invoice that has been posted to the general ledger?).

   Business Rules for Modify Existing:

   1. When components are added to an existing asset, the asset becomes a system. A system is defined as items that work together to perform one function.
   2. A component can only be added to an existing asset that was purchased in the current fiscal year.
   1. Any component costing 5,000 or more that is part of a system purchased in a prior fiscal year will need to be created as an asset. Use CAMS Tran Type of "New".
   2. Any component under $5,000 purchased for an asset in a prior year should be expensed to S&E.
   3. When a component of a system is $5000 or more and the life of the component differs from that of the existing asset the component should be created as its own asset. Use CAMS Transaction Type of "New".
   4. The existing asset should be reviewed to ensure the asset category (i.e., moveable, fabrication) matches that of the purchased component to be applied.

   When selecting Modify Existing you will be expected to provide the asset number(s) the line items should be added to. Use the asset number 1 field to enter the asset number the line item cost should be added to. If the quantity is greater than one you can use the Add Asset button to insert more asset number lines.

   Finding a Capital Asset Number in the FIS
   To find an asset number, use the Financial Information System (FIS) Capital Asset Maintenance Screen.

   After you have logged into the FIS, at the Welcome to the FIS screen click on Enter TP Documents. After clicking on the Enter TP Documents button, you will be taken to the Document Group Selection screen. Clicking on the CAMS (wrench & hammer) button at the bottom left of the screen will take you to the Capital Asset Maintenance Group. Once the CAMS screens have been returned to the Type zone, double click on Capital Asset Maintenance or place the cursor on Capital Asset Maintenance and click on the Open button.

   On the main lookup screen searches can be made by Asset Number, IU Tag Number, Owner Chart/Account, Asset Type, Manufacturer, Condition, and Status.

   

   On the right of the main lookup screen other searches are offered. The Purchase Order search is one of these options. Many departments use the Purchase Order as the key to their office filing systems. To compliment this, a lookup screen which uses the PO and related documents as search keys has been developed. The PO Number is the default line. The Requisition Number and the Doc Number are other listed search criteria.

   The Doc Number is the TOPS AP number, EPIC PREQ number, or the Financial Document number. If a financial document capitalized the expense the asset can be retrieved by the GEC, or DI document number. When a financial document capitalized the expense the asset can not be retrieved by the Purchase Order number.

   The Search button will initiate the search.

   Following is a listing of moveable equipment object codes:

   Object Code	Description
   7000	Capital Equipment
   7015	Computer Equipment
   7016	Computer Software
   7030	Capital Equipment - Federally Funded
   7031	Capital Equipment - Federally Owned
   7032	Capital Equipment - Non-IU or Fed Owned
   7035	Computer Equipment - Federally Funded
   7036	Computer Equipment - Federally Owned
   7045	Computer Software - Federally Owned
   7600	Art & Museum Objects
   7070	Trade-in Capital Equipment

   
   

   3. Fabrication
      The term Fabrication is used in conjunction with moveable equipment and should not be confused with building construction projects. The transaction type of Fabrication identifies payments as construction in progress. A fabrication is a moveable asset created (built) by a university organization. A Fabrication Request document generates the asset number that is required when the Fabrication CAMS Tran Type is selected. Therefore the organization must submit a Fabrication Request document prior to any purchases.

      Following is a listing of fabrication object codes:

      Object Code	Description
      7500	Capital Equipment-University Constructed
      7530	Capital Equipment-Univ. Const. Federally Funded
      7531	Capital Equipment-Univ. Const-Federally Owned
      7535	Capital Equipment Univ. Const. Computer Equip. Fed Fund

      (See CSOP 12.0 Fabricated Equipment)

   4. Capital Lease
      A lease purchase is a contractual agreement conveying the right to use property, plant, or equipment usually for a stated period of time. A lease agreement involves at least two parties, a lessor and a lessee. The lessor agrees to allow the lessee to use the item for a specified period of time in return for periodic payments. There are two types of lease purchases available; an operating lease and a capital lease.

      An operating lease includes a lessor (vendor), who collects rent, and a lessee (the university), who uses the leased equipment and pays periodic rent for such use. The lessee (the university) merely uses the equipment; there is no transfer of ownership, or any risk of benefit of ownership.

      A capital lease transfers substantially all of the benefits and risk inherent in ownership to the equipment to the lessee (the university).

      A Capital Lease purchase is the act of acquiring assets by making periodic payments, which generally consist of principle and interest.

      A capital lease will require the completion of the Asset Information Collection Document.

      Following is a listing of fabrication object codes:

      Object Code	Description
      7099	Capital Lease
      4400	Interest

   5. Services that can be capitalized
   
   Purchasing, Accounts Payable, and Capital Asset Management have worked together to develop the procurement system to allow for the capitalization of services and not require a quantity. Normally services are paid in increments and are not assigned a quantity. However the Capital Asset Management (asset creation module) does require a quantity. For this reason new transaction types were added that identify services that can be capitalized. When these services are on your requisition selecting the appropriate CAMS Tran Type will allow the service to be coded as capital and not require a quantity. This will allow for incremental invoicing on the service line item.

   Listed below are the CAMS Tran Types for services:

   1. Cost of assembling the asset
   2. Cost of installation
   3. In-transit Insurance
   4. Preparing the site and asset for its intended use
   5. Training
   6. Other Service

   Freight, and Shipping and Handling charges do not have a CAMS Tran Type however they can be capitalized. Freight, and Shipping and Handing are entered as a below the line items and therefore do not require a CAMS Tran Type.

3. EPIC CAMS Document
   The CAMS Tran Type of New or Capital Lease will require the completion of the EPIC CAMS Document. This document will be routed to the requisition initiator using workflow when the purchase order is approved.

   Listed below are the three types of acquisitions for capital purchases followed by the required information for each:

   1. Purchasing of individual assets.
   2. Purchasing line items to create one system.
   3. Purchasing line items to create multiple systems.
   1. The initial purchase of individual assets.
      When line items will create individual assets the initiator will click on the Individual Asset button. See the section on Completing the CAMS EPIC Documentfor further requirements.
   2. Purchasing line items to create one system.
      For an initial purchase of a system you may record line items as capital if the items work together to perform one function and the total cost of the system meets the capitalization requirements. Each of the line items must be necessary for the system to function.

      If "All of the line items will be added together to create one system" the user will click on the Single System button.

      Completing the CAMS Document
      The following information is required for options 1 and 2:

      1. The "Not expected to be received in current FY" should be checked if any of the following conditions exist:
      1. The equipment will not be received within the current fiscal year, even if the payment is made prior to the fiscal year end.
      2. Partial payments will be issued for the equipment (down payment) and the equipment is expected to be received after the fiscal year end.
      3. Equipment has been received, but will not be placed in service prior to the fiscal year end.
      4. Assembling an asset. When components are purchased to assemble an asset that will not be placed in service prior to the fiscal year end. Example a department purchases a cab and chassis for a truck but the initial purchase does not include the body. The truck will not be operational until the body is ordered and the parts assembled to complete the truck.

      Checking this flag and clicking on the "update view" button will assign the asset type code to 40004 - Movable assets not yet received, or placed in service. This asset type code identifies the asset as "in progress" until the equipment is received. In process assets are not eligible for depreciation. When the equipment is received and tagged the University Capital Asset Office will change the create date and assign an asset type code with a depreciable life.

      The University Capital Asset Offices uses the 40004 asset type code to generate a report. For this reason when the asset type code is 40004 it should only be changed by the University Capital Asset Office.

      2. The asset type code will be required if the "Not expected to be received in current FY' is unchecked. The asset type code assigns the useful life of the asset for depreciation. For this reason it is important the most appropriate code is selected. A complete listing of Asset Type Codes can be generated from the Asset Type Code report found in the Capital Asset Management Edit folder in IUIE.
      3. If the "Manufacturer is same as Vendor" is "yes" the system will assign the Manufacture. If "no" is the correct response then the processor will need to enter the manufacturer.

   3. Purchasing line items to create multiple systems.
      If "Any of the line items will be added together to create multiple system assets" the user should select the Multiple System button. The user will be prompted to enter information that communicates how the line items should be grouped together to create system assets. The following information is requested from the department:
      1. The total number of systems to be created on this purchase order.
      2. Indicate each of the line items to be added together to create a system.
      3. Please include a description for the system asset(s), location, and asset type code. The number of system assets you expect to be created. The user will need to indicate each of the line items to be added together to create each system. A description of the system, location of the asset, and the asset type code will be needed.
      4. If this purchase order should be combined with line items from another purchase order(s) please indicate the purchase order numbers.

Systems are defined as components that work together to perform one function. These components must be necessary for the system to function as a whole. Removal of any one component would result in the system not operation at the require capacity or for the intended purpose.

Equipment. The term "equipment" includes delivery equipment, office equipment, machinery, furniture and fixtures, factory equipment and similar fixed assets.