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When capital equipment is purchased with the intent to resale the equipment to other university organization, the initial purchase should be made using object code 5323, "equipment for resale," on the requisition.
Once the installation of the purchased equipment is complete and the organization is ready to bill the receiving organization, an Internal Billing Document needs to be processed using the appropriate capital object code in the expense section on the Internal Billing Document.
It should be noted that contract and grant accounts are restricted funds and should never be used to purchase equipment for resale.
Labor and installation charges that make an asset ready for its intended use can be capitalized when they are readily identified with the installation of the equipment.
Service costs that can be capitalized with equipment purchases include:
- Cost of assembling the asset
- Cost of installation
- Freight
- In-transit Insurance
- Preparing the site and asset for its intended use
- Training
Year End Process
The costs accumulated (invoiced) in object code 5323 that have not been resold to departments need to be capitalized through an accrual entry to recognize the asset(s) not yet placed in service.
Internal Billing
The Internal Billing Document is used for billing of goods or services provided by a university organization to another organization, reflecting income to the provider and expense to the customer. A capital equipment object code should only be used on an Internal Billing Document when the original purchase was coded with object code 5323, "equipment for resale".
On the Internal Billing Document after entering a capital object code, the "FIS Transaction Processing" dialog box (pictured below) will appear upon tabbing out of the "Object" field.
"Create new asset" should be selected when the expense will be capitalized for the first time. After selecting "Create new asset" the "Enter Pending Asset Information" screen will be displayed.
Enter Asset Information:
This screen is used to enter identifying information needed to create an asset. Once the information is filled in, click on the "Save" button:
- *Quantity
- *Vendor
- *Asset type
- *Manufacture
- Model
- *Description
- *IU tag Number
- Serial Number
- *Campus
- *Building
- *Room
- Subroom
Fields with an (*) are required fields.
Note that the IU tag number is a required field. When an IU tag number has not been assigned, enter the capital letter "U" in the IU tag field. This will set the IU tag to null when the asset is created. This will require someone to add the tagging information when the untagged asset sheet is presented for tagging.
For information on how to complete an Internal Billing Document reference the training document at the following url: http://www.fms.indiana.edu/fis/documentation/internal-billing.pdf
Example:
The FMS organization contracts with the physical plant to purchase and install the projectors that will be mounted to the ceiling.
The original purchase of the projector in the procurement system is coded with object code 5323 as this will be capital equipment that is purchased for resale.
Requisition:
The requisition to purchase the goods and services will be initiated by Physical Plant using their account number:
After the physical plant installs the projectors, the physical plant will bill FMS using the Internal Billing document. The projector will be capitalized at this time by the selection of a capital object code in the expense section of the Internal Billing document. The projector and applicable costs associated with the installation, will reside on FMS's account as a capital asset.
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