FMPM 322 - Acquisitions of Plant and Equipment

Scope

This procedure sets out the requirements for the acquisition, identification and recording of Plant and Equipment assets to ensure the University's Capital Assets Register is complete and accurate and new assets are recorded on a timely basis.

Definitions

Capital Asset

Non-Capital Asset

Property, Plant and Equipment

• general

• cost determination

• categorization

• depreciation

• software

Procedure

Cost Determination

The University accounts for Plant and Equipment as assets in accordance with the Asset Recognition Threshold as set out in FMPM 321: Authorised Limits - Plant and Equipment.

It is recommended that Organisational Units keep a record of plant and equipment costing less than the asset recognition threshold.  This record is beneficial in maintaining details of warranty and for reporting any damage, loss or theft. Refer FMPM 330: Policy - Non-Capital Assets.

In determining the cost of an asset, the asset unit must first be identified.  Where an operating unit has a number of dependent components (e.g. an AV System) and the functioning of the unit depends on all of those components being present, the value of the unit will include all the components.  The component parts may individually cost less than the asset recognition threshold but collectively, as a total unit, cost more than the asset recognition threshold.

The cost of an asset for accounting purposes must include the purchase cost and all incidental costs associated with getting the asset ready for use.  For example, incidental items could include freight and installation charges.

Where an existing asset is traded as part consideration for a new asset the cost of the new asset is the gross value of the invoice i.e. the value before allowing for the trade amount.

The cost of major alterations or improvements to an existing asset may also be added to the cost of the asset if the overall value or the useful life of the asset is significantly increased.

Where an item of Plant and Equipment is either manufactured or constructed, the cost of all components including salaries and materials should be included in determining the final cost of the unit.

Initial Identification of an Asset

Organisational Unit

At the time of preparation of a purchase requisition the originating Organisational Unit must:

• identify those purchases which fall within the Plant and Equipment definition; and

• determine the cost of the acquisition.

The purchase requisition must be coded to one of the following use codes:

• 2320 Motor Vehicles;

• 2325 Computing Equipment;

• 2381 Intangibles – Software; or

• 2330 Other Plant and Equipment;

Purchase requisitions are then dealt with in accordance with FMPM 711: Procedure

Purchasing Officer

At the time of preparing a purchase order the purchasing officer checks the use code and description on the purchase requisition.  Where the use code begins with 23xx the purchasing officer answers the asset indicator question with a "Y" for yes when generating the purchase order.

Assigning an Asset Number

The Finance Officer – Assets Team, Financial and Business Services:

• runs an Asset Identification Report on those purchase orders with an asset indicator 'Y';

• reviews expense use codes for miscoding of assets purchases;

• confirms that the purchase relates to the acquisition or manufacture of a capital asset;

• assigns an asset number to the asset; and

• sends an Asset Identification Form (AIF) with details of the purchase to the originating Organisational Unit.

Marking and Noting Details of Asset

Organisational Unit

Upon receiving or completing manufacture of an asset the Organisational Unit must:

• complete the AIF recording all relevant aspects of the asset (including the date ready for use);

• where practicable, indelibly mark the asset with its assigned asset number; and

• return the completed AIF to the Finance Officer, Assets Team, Financial and Business Services.

Maintaining the Register of Capital Assets

Upon receipt of the AIF the Finance Officer, Assets Team, Financial and Business Services must:

• match the completed AIF with a photocopy of the invoice from Accounts Payable  to determine the final cost of the asset;

• complete Part B of the AIF; and

• enter the asset details into the Register of Capital Assets.

The Register of Capital Assets is reconciled to the appropriate General Ledger Account.

Plant and Equipment Acquired From Grants

Unless the grantor has imposed conditions to the contrary Plant and Equipment which has been purchased from a grant funded by an outside body will be subject to these procedures, and will be a University asset.

Where an imposed condition is that the Plant and Equipment will not vest in the name of the University the purchase will be accounted for as an expense.

Donated Equipment

Where Plant and Equipment of a value >$5,000 is donated to the University, the Organisational Unit responsible for the item must promptly notify the Finance Officer – Assets Team, Financial and Business Services of the donation so the item can be included in the Capital Assets Register.  Refer FMPM 940: Policy - Donated Property, Plant, Equipment and Cash.

The steps set out in this FMPM Procedure are then to be followed.

For Plant & Equipment of a value < $5,000, refer to FMPM 330: Policy – Non-Capital Assets.

Valuation of donated Plant and Equipment will be arranged by the Finance Officer – Assets Team, Financial and Business Services in accordance with Appendix B - Accounting Policies.

Specimen Forms

Asset Identification Form

Related documents, legislation or JCU Statutes

Financial and Performance Management  Standard 2009 (s.23)

Non-Current Asset Policies for the Queensland Public Sector

For enquiries in relation to this Finance Procedure please contact capitalandinfra@jcu.edu.au

Administration

Approval Details

Revision History