Moveable Equipment purchased by a Reporting Auxiliary will be capitalized within the 95 plant fund account set up for that Reporting Auxiliary.

1. Determining the Object code used for Capitalization
2. Determining the 95 Plant Fund Account used for Capitalization.
3. Examples of the Capitalization Process
4. Entries Initiated in CAMS
5. Capitalization entries for Asset Retirement
6. Capitalization entries for Asset Transfers
7. Capitalization entries for Gift or Found Equipment on Add an Asset
8. Capitalization entries for Depreciation Expense

1. Determining the Object code used for Capitalization

The proper Balance Sheet Object Code is determined by an attribute of the Financial Object Code. This attribute is called the Financial Object Code Sub Type and links the Capital Expenditure Object Code (7XXX) to the Balance Sheet Object Code. For example, Object Code 7015 has an Object Code Sub Type of CM (Capital Equipment Moveable). All Object Codes with a Sub Type of CM are capitalized on the Balance Sheet as Object Code 8610.

Below is a full breakdown of the Object Code Sub Types and their associated capitalization and accumulated depreciation Object Codes.

Table A

Sub Type	Expenditure Object Code	Description	Capital Object Code	Accumulated Depreciation Object Code
AM	7600, 7677	Art and Museum	8615
BI	7329	Bond Issuance	8629	8929
BD	7300, 7301, 7303, 7377	Buildings	8601	8901
BF	7305	Buildings Federally Funded	8605	8905
CM	7000, 7015, 7070, 7700, 7701	Capital Equipment	8610	8910
CL	7099	Capital Lease Purchases	9603
C1	7019, 7020	Capital Lease Equipment Above Threshold	8627	8927
C2	7022, 7023	Capital Lease Equipment Below Threshold	8627	8927
CF	7030, 7035, 7730	Capital Equipment Federally Funded	8611	8910
CO	7031, 7032, 7036, 7731, 7732	Capital Equipment Federally Owned
UC	7500	Fabrications - University Constructed	8619	8933
UF	7530, 7535	Fabrications Federally Funded	8619	8933
UO	7531, 7532	Fabrications Federal, or Other Owned
IA	7261	Intangibles	8661	8961
IC	7262	Intangibles Federally Funded	8662	8962
IO	7263	Intangibles Federally Owned
IF	7400, 7401, 7402, 7403, 7404, 7405, 7406, 7408, 7409, 7410, 7411	Infrastructure	8604	8904
LA	7200, 7201, 7277	Land	8603
LR	7465, 7466, 7467, 7468, 7477	Land Improvements	8665	8965
LE	7800, 7801, 7805	Leasehold Improvements	8608	8908
LI	7100, 7157,7177	Library Books	8613	8965
LF	7130, 7158	Library Books Federally Funded	8614	8913

Assets created within CAMS that are "Federally Owned" will appear on inventory listings, but no "Federally Owned" payments are capitalized or depreciated in the General Ledger.

If an Object Code Sub Type has a blank accumulated depreciation Object Code it is because that type of asset is not depreciated.

2. Determining the 95 Plant Fund Account used for Capitalization.

The proper 95 plant fund account number is determined by both the Object Code Sub Type and the Organization. Within the Financial Information System, each account number is assigned to an Organization and each Organization is assigned two 95 plant fund account numbers. One 95 plant fund account number, referred to as the Organization plant fund account number, is used by the capitalization process when Moveable Equipment items are purchased. The other 95 plant fund account number, referred to as the Campus plant fund account number, is used by the capitalization process when Non-Moveable capital items are purchased.

Below is a table illustrating how Object Code Sub Types dictate which of the two 95 plant fund account numbers will be used:

Table B

Sub Type	Description	95 Plant Fund Account
AM	Art and Museum	Campus Plant Fund
BI	Bond Issuance	Campus Plant Fund
BD, BF	Buildings	Campus Plant Fund
CM, CF	Capital Equipment	Org Plant Fund
UC, UF	Fabricated Equipment	Org Plant Fund
IA, IC	Intangibles	Campus Plant Fund
IF	Infrastructure	Campus Plant Fund
LA	Land	Campus Plant Fund
LR	Land Improvements	Campus Plant Fund
LE	Leasehold Improvements	Campus Plant Fund
LI, LF	Library Books	Campus Plant Fund

3. Examples of the Capitalization Process

Account 1020000 purchases a computer under Object Code 7015 for $5,000.00. Object Code 7015 has a Financial Object Code Sub Type of CM, so the asset will be capitalized using Object Code 8610. Account 1020000 belongs to the Vice President/Chancellor/General Administration Organization and has been assigned an Organization plant fund account number of 9520074 and a Campus plant fund account number of 9520000. Because a Moveable capital item is being purchased, the capitalization process will post entries to the Organization plant fund account number, 9520074. The following entries will be generated:

Actual Purchase:

Account Number	Object Code	Object Code Description	Debit	Credit
1020000	7015	Computer Equipment	$5.000.00
1020000	8000	Cash in Bank		$5.000.00

Capitalization Process:

Account Number	Object Code	Object Code Description	Debit	Credit
9520074	8610	Capital Equipmentt	$5.000.00
9520074	9899	Fund Balance		$5.000.00

As a result of the above entries, Account 9520074 shows $5,000.00 of capital equipment on its Balance Sheet and account 1020000 shows a capital expenditure on its Operating Statement.

Within the 9520074 account, an offset of $5,000.00 was posted to Object Code 9899 to balance the entry.

4. Entries Initiated in CAMS

The Capital Asset Management System (CAMS) can generate four types of financial transactions that get posted to the General Ledger. They are Asset Retirements (AR), Asset Transfers (AT), Add an Asset (AA), and Depreciation Expense (DEPR). With one exception, all entries generated by these four processes will be posted to a 95 plant fund account. Only when Gift or Found Equipment is entered on the Add an Asset document will entries be posted to an individual operating account. In this case, offsetting entries will get posted to Income (Object Code 1175) and Expense (7XXX). This has no affect on cash or fund balance.
5. Capitalization entries for Asset Retirement

Retirement entries will, as a rule of thumb, only affect the 95 plant fund.

Example: Account 2321375 purchased a desk under Object Code 7000 for $5,000.00. Object Code 7000 has a Financial Object Code Sub Type of CM, so the asset was capitalized using Object Code 8610 in the Organization plant fund, 9520080.

If the asset is retired and there has been no Depreciation, the entries would be:

Retirement Entries:

Account Number	Object Code	Object Code Description	Debit	Credit
9520080	4998	Gain/Loss Disposition of assets	$5,000.00
9520080	8610	Capital Equipment		$5.000.00

If the Asset were partially depreciated, the entry might be:

Retirement Entries:

Account Number	Object Code	Object Code Description	Debit	Credit
9520080	4998	Gain/Loss Disposition of assets	$2500.00
9520080	8910	Capital Equipment	$2500.00
9520080	8610	Capital Equipment		$5,000.00

6. Capitalization entries for Asset Transfers

Transferring an asset to another Organization will only affect the 95 plant fund. The capitalized cost, accumulated depreciation and the residual fund balance will be removed from the current owner's account and placed on the new owner's account.

Example: Account 6048400 purchased an X-ray machine under object code 7000 for $5,000.00. Object Code 7000 has a Financial Object Code Sub Type of CM, so the asset was capitalized using Object Code 8610 in the Organization's plant fund, 9548400.

If the asset is transferred to account 1035600 with an Organization plant fund of 9520024, and assuming no depreciation, the entries would be:

Remove the asset from the current account's plant fund:

Account Number	Object Code	Object Code Description	Debit	Credit
9548400	9899	Fund Balance	$5,000.00
9548400	8610	Capital Equipment		$5.000.00

Place the asset on the new owner account's plant fund:

Account Number	Object Code	Object Code Description	Debit	Credit
9520024	8610	Capital Equipment	$5,000.00
9520024	9899	Fund Balance		$5,000.00

Note that the same Object Codes used to capitalize the asset are used to transfer the asset. If depreciation had been recorded for this asset, the accumulated depreciation would have transferred as well.

7. Capitalization entries for Gift or Found Equipment on Add an Asset

When entering information on the Add an Asset document for gift or found equipment, the initiator will supply the account number, Object Code and the market value of the item. Accounting entries are then created based on this information. The account will see offsetting entries to the expense Object Code (7XXX) and the income Object Code (1175), for the value of the item. To better isolate gift and found equipment from actual purchases, an Object Code of 7700 or 7701 is used. The entries offset, having no effect on cash or fund balance.

Example:
Account 1270000 finds an asset. The fair market value of the asset is determined to be $5,500.00. Object Code 7701 has a Financial Object Code Sub Type of CM, so the asset will be Capitalized using Object Code 8610 on the Organization's plant fund, 9570074. The following entries are then created:

Transaction entered on the Add an Asset document:

Account Number	Object Code	Object Code Description	Debit	Credit
1270000	7701	Found Cap Equipment	$5,000.00

Transaction Generated by the Add an Asset Document:

Account Number	Object Code	Object Code Description	Debit	Credit
1270000	1175	Found Cap Equipment		$5,000.00

Capitalization Process:

Account Number	Object Code	Object Code Description	Debit	Credit
9570074	8610	Capital Equipment	$5,000.00
9570074	9899	Fund Balance		$5,000.00

8. Capitalization entries for Depreciation Expense

The Capital Asset Management System (CAMS) will calculate and post depreciation expense monthly. The straight-line method is used for the calculation. Each asset will be depreciated from the capitalization date (assigned when the Capital Asset Office officially recognizes the asset) and depreciated over the asset's useful life. Every asset in CAMS is assigned an Asset Type that has an associated useful life. The depreciation entry will debit Object Code 51XX, Depreciation Expense, and credit the appropriate accumulated depreciation Object Code based on the Object Code Sub Type. Depreciation expense has no affect on cash and will be posted to the 95 plant fund account.

Example: Account 6617000 purchased a printer for $9,000.00 using object code 7000. Object Code 7000 has a Financial Object Code Sub Type of CM, so the asset will be capitalized using Object Code 8610 to the Organization's plant fund, 9517000. Printers have a depreciable life of 8 years so the first month's depreciation would be calculated as follows:

Depreciation Expense = (Depreciable Base X (Number of Months to Depreciate / (Useful Life in Years X 12 Months per Year)))

$93.75 = ($9,000.00 X (1/(8 X 12)))

Depreciation expense entry:

Account Number	Object Code	Object Code Description	Debit	Credit
9517000	5115	Depreciation Expense	$93.75
9517000	8910	Accumulated Depreciation Expense		$93.75