Property, Plant and Equipment Management Policy

Summary of Policy

The Dartmouth College Property, Plant and Equipment Management policy sets forth the responsibilities, roles, and guidelines regarding capital and non-capital assets. This document also defines the appropriate treatment of costs incurred for the procurement of equipment, fabricated equipment, new construction, renovations, improvements, and maintenance projects. This policy, related policies and procedures and appendices are to be used by Dartmouth faculty, staff, project managers and others to distinguish between capital and non-capital costs. 

Reason for Policy

Dartmouth College has a responsibility to accurately record, maintain and account for assets under its stewardship. This policy outlines how Dartmouth College complies with government regulations and accounting industry standards, and how it supports accurate reporting of the physical assets used to conduct its mission.  

Affected Parties

All Groups

Policy Statement

Table of Contents

•    Summary of Policy
•    Reason for Policy
•    Scope: Who should know this policy
•    Roles and Responsibilities
•    Definition of Property
•    Property Valuation
•    Property Thresholds
•    Acquisition and Financing Methods
•    Transfers and Relocations
•    Disposition of Property
•    Appendices
•    Related Policies 
•    Forms
•    Contacts

SCOPE: WHO SHOULD KNOW THIS POLICY?

•    Controller's Office 
•    Financial and Fiscal Officers and staff of schools, divisions, departments, or centers
•    Office of Sponsored Projects 
•    Procurement Services 
•    Project Managers 
•    Staff and or faculty who have purchasing authority   

Policy Statement

Organizational Roles and Responsibilities

  • Approval Authority: Controller  
  • Office with Primary Responsibility: Controller's Office/Financial Reporting- Financial Reporting Analyst(s) manage Dartmouth's Fixed Assets recording and reporting. These individual(s) will be responsible for the following tasks: 
    • Review and approve all requisitions totaling $5,000 and above.
    • Ensure items that flow into the Fixed Asset Mass Additions Tank from Accounts Payable are reviewed and recorded in the Fixed Asset Module in a timely fashion. 
    • Manually upload assets that are not processed through Accounts Payable. 
    • Reconcile the Fixed Asset Module to the General Ledger monthly. 
    • Prepare journal entry to record department charges and clearing account offset transactions monthly. 
    • Retire assets from the Fixed Asset Module when requested by a division or the Fixed Asset/Surplus Property Administrator. 
    • Work with Accounts Payable to process PTAEO or Chart String corrections or reclasses requested by departments. 
  • Office with Secondary Responsibility: Procurement Services/Fixed Asset/Surplus Property Administrator. This individual will be responsible for the following tasks: 
    • Assign a tag number to all moveable capital and non-capital assets. 
    • Perform a physical inventory of moveable capital and non-capital equipment every two years. 
    • Update asset records in the Fixed Asset Module when requested by a custodian, or department or as part of the biannual inventory process.
    • Document and account for assets located off campus by retaining and maintaining records of each unit. 
    • Retire assets ($5,000-$24,999 only) from the Fixed Asset Module when requested by a Principal Investigator (PI), custodian or department. 
    • Coordinate the disposition of property. 
  • Office with Responsibility: Departmental Property Manager/Custodian. Each department will assign a custodian who will ensure assets within their department are accounted for and will report capital and non-capital asset related information to Procurement Services/ Fixed Asset/Surplus Property Administrator. This individual will be responsible for the following tasks regarding assets assigned to them: 
    • Ensure proper use and safekeeping of all capital and non-capital assets. 
    • Have knowledge of the location of all capital and non-capital assets. 
    • Using the appropriate form, notify Procurement Services or Fixed Asset/Surplus Property Administrator/Material Management of all disposals, fabrications, transfers, or other changes including relocation of individual items or departmental transfers related to capital and non-capital assets. 
    • A Materials Management Disposal Request Form must be completed and sent to Materials.Management@Dartmouth.edu for those items destined to be recycled with no resale value. 
    • An Equipment Transfer Request Form must be completed and sent to Fixed.Assets@Dartmouth.edu for those assets which are transferred, donated, relocated or to be sold or traded in toward new or used equipment. 
  • Office with Responsibility: Departmental Staff with Purchasing or Financial role. Each department will assign staff who will process, review and, if necessary, make corrections to transactions. 
    • Process equipment requisitions in accordance with Dartmouth policies and procedures.  
    • Notify Fixed.Assets@Dartmouth.edu of any equipment purchases over $5,000 that are acquired by special exception, including PCard purchases, Corporate Card purchases, gifts and donations or other exceptions approved by Procurement. 
    • Ensure that any asset purchase that includes a trade-in of existing equipment is recorded at the full cost before any reduction for the trade-in. Contact vendor to request a credit memo for the trade-in reduction amount. 
    • Notify the Fixed Asset/Surplus Property Administrator of such trade-in and provide equipment detail. 
    • Notify Financial Reporting/Financial Reporting Analyst(s) to request corrections to capital or non-capital equipment related transactions. 

Definition of Property

  • Property is defined as any capital or non-capital tangible item that is purchased (externally or internally), donated, loaned, fabricated, constructed, or acquired through trade or transfer, regardless of value or condition. Leased items are classified as a Dartmouth asset if the right to use the asset has a value of $100,000 or higher. The asset will be classified as either Finance or Operating based on the terms of the lease agreement. Contact Financial Reporting to determine the classification and accounting for the lease. See Acquisition and Financing Methods section below for guidance regarding lease buyout(s) or asset purchase at the end of a lease.
  • Non-Capital property includes all equipment that is not permanently affixed to a building, has a useful life of greater than one year and has a unit cost of $5,000 - $24,999. Non-Capital equipment is recorded and tracked in the Fixed Asset Module and is subject to periodic inventories. 
  • Capital property is recorded and tracked in the Fixed Asset Module and may be subject to depreciation and periodic inventories. Capital property includes:
    • Land (does not have a threshold; all land is capitalized regardless of cost)
    • Buildings
    • Constructed, renovated, or fabricated property (CIP) that has a useful life greater than one year and a cost of $50,000 or more
    • Equipment that is not permanently affixed to a building and has a useful life of greater than one year and has a unit cost of $25,000 or more 

Property Valuation

  • Purchased equipment or property is valued at the cost/invoice price of the item before any reduction for a trade-in of existing equipment or property. The value also includes accessories, delivery, and installation.
  • Donated equipment or property is valued at its fair market value at time of donation for insurance purposes but is uploaded into the Fixed Asset System at zero value. 
  • Constructed (CIP) equipment or property includes all identifiable costs including engineering, consulting, contractors, equipment, landscaping, internal labor, and other costs. See the Constructed and Fabricated Asset Policy (ID 024-0006) for additional details. 
  • Fabricated equipment or property includes all identifiable component costs. The asset is uploaded into the Fixed Asset Module at the sum of the costs. 
  • Leased equipment or property includes only components that are integral to the right to use the underlying asset. The leased asset is recorded at the present value of the remaining lease payments, plus any lease payments made on or before commencement (less any lease incentives received), and any initial direct costs incurred by the lessee.  
  • Loaned equipment or property is valued at its fair market value at time of delivery for insurance purposes but is uploaded into the Fixed Asset Module at zero value. 

Property Thresholds

  • Non-Capital property/equipment $5,000 -$24,999. 
  • Capital property/equipment equal to or greater than $25,000. 
  • Construction in Progress equal to or greater than $50,000. 
  • Fabricated property/equipment is subject to threshold amounts as listed above. For fabricated equipment meeting the thresholds above, an Intent to Fabricate Form must be completed. For fabricated equipment with an estimated total cost over $25,000, a CIP must also be established to account for the costs. 
  • Leased property/equipment with a right to use the asset valued at $100,000 or greater unless purchased as part of a grant or contractual agreement. Contact Financial Reporting to determine the classification and accounting for the lease. 
  • Some grant agreements may require tracking property under the standard threshold of $5,000. Fixed Assets must be contacted prior to acquiring property that does not fit within Dartmouth's standard Property, Plant and Equipment Management Policy. 
  • See Appendix E Property, Plant and Equipment Threshold  

Acquisition and Financing Methods

  • Capital and non-capital property and equipment is purchased or leased in compliance with standard purchasing policies and procedures as prescribed by Procurement Services.  For equipment purchased with sponsored research funds, the Grant Manager and Principal Investigator (PI) are responsible for ensuring compliance with sponsor agreements.   
  • Leased equipment, vehicle, or durable goods with value of $5,000 or greater (at the time of purchase) that is purchased at end of lease (or lease buy-out) must be accounted for in the Fixed Asset Module. Contact Financial Reporting to properly account for the purchase and further guidance.
  • Capital and non-capital property and equipment may also be acquired through donations, loans, or transfers from other entities. These transactions are to be executed in compliance with Dartmouth College policies and procedures including specifically materials management policies and procedures. 
  • Capital and non-capital property may be obtained using grant funds, gift funds, departmental or division operating or reserve funds, to the extent the purchase meets documented requirements. If funds are not available from usual sources, an internal loan is an alternative. Departments may borrow from Dartmouth's working capital and repay the loan, plus interest, monthly, from operating dollars. All internal loans must be approved before the asset is purchased or the capital construction/renovation begins. See the Internal Loan Policy (ID 024-0010) for more information. 

Transfers and Relocations 

  • When property is transferred to or from Dartmouth, documentation forms are required to be completed and submitted to the Fixed Asset/Surplus Property Administrator. For property transferred within Dartmouth or to outside entities, the Dartmouth Equipment/Asset Transfer Request Form must be completed.  For property transferred to Dartmouth from outside entities, the Equipment/Asset On-boarding Form must be completed. See Property Disposition Policy (ID 024-0008) for more information.
  • If no monetary transaction is involved, then departments can transfer item(s) to other departments within Dartmouth. However, the Fixed Asset/Surplus Property Administrator must be notified to process the location change in the Oracle Fixed Asset Module prior to relocation. See Property Disposition Policy (ID 024-0008) for more information.
  • If grant funds were involved in the purchase, Procurement and OSP must be contacted before relocation or transfer of items or equipment.

Disposition of Property

  • Disposition or disposal of property may occur due to various reasons and must be communicated to the appropriate department(s) utilizing the appropriate forms. Reasons for dispositions include being deemed obsolete, surplus, or unserviceable, donated, returned, sold, damaged, or destruction, including theft, trade in or transferred. 
  • Departments must report all incidents resulting in property/equipment loss, damage, or destruction, including theft, to Risk and Internal Control Services. Forms and instructions are available on the website: Risk Management > Claims and Incident Reporting https://www.dartmouth.edu/rmi/rmsclaims/ 
  • Departments must also report any changes in asset location or status using the appropriate form.
  • A Materials Management Disposal Request Form must be completed and sent to Materials.Management@Dartmouth.edu for those items destined to be recycled with no resale value. 
  • An Equipment Transfer Request Form must be completed and sent to Fixed.Assets@Dartmouth.edu for those assets which are transferred, to be sold or traded in toward new or used equipment. 
  • See Property Disposition Policy (ID 024- 0008)

 Related Policies 

•    Computer Transfer Policy (ID 024-0007)
•    Constructed and Fabricated Asset Policy (ID 024-0006)
•    Internal Loan Policy (ID 024-0010)
•    Moveable Equipment Inventory Policy (ID 024-0011)
•    Property Disposition Policy (ID 024-0008)

Appendices 

Forms 

Most relevant forms and instructions can be found on the Finance website under Forms, Policies, and Systems.

•    CIP Account Setup Form (attached below)
•    Componentization Template (attached below) 
•    Equipment/Asset Transfer Request Form 
•    Equipment Off Campus Request Form 
•    Equipment Onboarding Form
•    Intent to Fabricate Request Form 
•    Materials Management Disposal Request Form 
•    Vehicle and Equipment Transfer Form

Contacts

Construction.in.Progress@Dartmouth.edu
Financial.Reports@Dartmouth.edu
Fixed.Assets@Dartmouth.edu
Materials.Management@Dartmouth.edu
Risk.Management@Dartmouth.edu

 

Appendix A: Definitions

Policy: Property, Plant, and Equipment (024-0001)

Accessory Equipment

A moveable item which can be added in order to make an existing piece of equipment more useful or versatile and can be used with other similar equipment. The cost of an accessory purchased separately after the original equipment has been received and made operable should not be added to the value of the original piece of equipment in the Fixed Asset Module. If an accessory meets all the criteria of non-capital or capital property (i.e., it is tangible property having a useful life greater than one year and an acquisition cost of $5,000 or more), it should be treated as a separate item of equipment.

 

 

Accumulated Depreciation           

The total amount of depreciation expense that has been allocated to an asset since it was put in use. Depreciation reduces the book value of an asset over time and is recorded for financial statement purposes.

 

 

Acquisition Cost/Value

Value of an item at the time it is acquired. The value is determined by the invoice price prior to any reduction for a trade in. Also included are costs incurred to place the asset into service, for example, freight, installation, and testing. For donations/gifts of property the acquisition cost is $0 in the Fixed Asset Module but the fair market value at the time of donation is used for insurance purposes.

 

 

Additions

Acquisition of new assets, or improvements or modifications to existing assets, that increase the useful life or the service potential of the asset. Examples include an addition to a building or renovations to repurpose the space; adding a new part(s) or feature to an existing piece of equipment that increases functionality. Additions that cost over $5,000 or more are added to the original capital or non-capital equipment.

 

 

Appraised Value

Estimated value of an asset based on the expertise of a qualified independent appraiser.

 

 

Asset

Anything of monetary value owned by Dartmouth. Examples of assets include cash, receivables, inventory, land, buildings and equipment (meeting specified dollar threshold).

 

 

Asset Number

Sequential number generated by the Fixed Asset System that is unique and assigned to each asset.

 

 

Audio Visual Systems

Although an audio-visual system's total combined cost is often greater than $25,000, a system generally consists of individual items of varying cost and also items that are not considered to be part of the equipment cost. Therefore, each line item is evaluated separately to determine the correct accounting treatment.

 

 

Bar Code Tag

Asset identification tag assigned and affixed to an asset to assist in its identification and the physical inventory of equipment.

 

 

Book Value

Difference between the acquisition cost and accumulated depreciation. At the time of acquisition, book value equals acquisition cost. For donations/gifts of property the acquisition cost is $0 in the fixed asset system but the fair market value at the time of donation is used for insurance purposes.

 

 

Building

Roofed facility intended for the permanent or temporary shelter of persons, animals, plants, or equipment.

 

 

Building Component

Equipment items designed and installed as an integral part of a structure. Building components differ from fixed equipment in that they are not separate from the building structure. Useful life of building components may differ from that of the building. Note: building components are only capitalized as part of a CIP project, all other purchases are considered repair and maintenance expenses.

 

 

Capital Asset

An item that is tangible, permanent, with a life of more than one year that is held for purposes other than investment or resale and has a value of $25,000 or greater. (Exceptions; land - no threshold). There are five types of capital assets: land, land improvements, buildings, building improvements (as part of a capital project/CIP), and equipment (moveable only unless part of a capital project/CIP).

 

 

Capital Equipment

A single piece of moveable equipment or an equipment system with a value of $25,000 or more. Multiple pieces of equipment that individually cost less than $25,000 but work together to be operational are considered a system. An example of a system: lab equipment that is dependent upon multiple pieces of equipment to function as a single unit. Examples of multiple pieces working together that are not a system: storage devices added to a server to add additional storage space, the server can operate without the additional device or, a computer linked to a projector, the computer and projector can each be used separately, or any add on item that is usable with multiple pieces of equipment and can easily be moved and used at another location.

 

 

Capital improvement

Capital improvement refers to expenditures over $50,000 which should be set up as a CIP that create an addition or expand a physical space, create an increase in capacity or efficiency, replace a major component or structural part of the property, and/or adapt a property to a new or different use.

 

 

Capitalize

To record a cost as an asset on the balance sheet for the purpose of amortizing (depreciating) the cost over its estimated useful life rather than as an expense in one accounting period.

 

 

Collectible

Items of value or interest acquired for display. Collectibles are not tracked in the Fixed Asset System unless required by contractual agreement. See Special Collections definition.

 

 

Construction in Progress (CIP)

Construction, additions, renovations, improvements, fabrication, or customization project where capital costs are expected to be greater than or equal to $50,000. See Constructed and Fabricated Asset Policy (ID: 024-0006).

 

 

Custodian

Faculty or staff member designated by a department/division as responsible for assets within their control. Responsibilities include assisting the Fixed Asset/Surplus Property Administrator in identifying and tagging new equipment, communicating changes in equipment location, and coordinating equipment sales, transfers or disposals using appropriate forms and assisting in a periodic inventory of all moveable equipment.

 

 

Depreciation

Method for allocating the cost of buildings and equipment over time. Generally accepted accounting principles and federal regulations dictate that the value of capital assets must be expensed over the estimated useful life of the asset.

 

 

Disposal

When Dartmouth property, assets, and moveable equipment is scrapped, recycled, or salvaged. Materials Management Disposal Request Form must be submitted to Materials Management.

 

 

Disposition

Refers to the disposition ofDartmouth property, assets, and moveable equipment and their removal from fixed assets inventory; this can include the sale, exchange, abandonment, and involuntary termination of assets. (Examples: sale, gift, donation, trade-in, transfer to another entity, etc.). An Equipment Transfer Request Form must be submitted to the Fixed Asset/Surplus Property Administrator.

 

 

Donated

Gifted or given to Dartmouth by a third party voluntarily, without charge or expectation of anything in return.

 

 

Equipment Onboarding

Equipment received by Dartmouth College through a transfer, gift, donation, loan, award, sub-award, lease, lease buyout, or P-Card purchase which are not subject to the standard purchase process through the office of Procurement Services. The Dartmouth College Equipment Onboarding Form must be completed and submitted to the Fixed Asset Administrator.

 

 

Equipment or Asset Trade-In

Refers to equipment or an asset that is conveyed to a vendor as payment or in exchange for a discount on another piece of equipment or asset. See Appendix G Trade-In and Credit Guidelines

 

 

Expensed Equipment

Equipment type items with a value of less than $5,000. Examples include most computers, file cabinets, calculators, chairs, printers, pictures, etc. Equipment under the $5,000 threshold is not tracked in the Fixed Asset Module and is not subject to periodic inventory unless otherwise required by a contractual agreement, such as a grant.

 

 

Expense

Charge incurred for the current fiscal period.

 

 

Export Control

Export Controls are a complex set of Federal laws and regulations that govern how physical items, technology, information, and data may be exported from the United States or shared with foreign persons within the United States. Export controls are designed to protect U.S. national security, to further U.S. foreign policy goals, and to maintain U.S. economic competitiveness. For more information see Export Control Policy (ID: 035-0008).

 

 

Fabricated Equipment

 

Equipment that is assembled or manufactured by Dartmouth using purchased materials, and in-house machinery, tools, and labor. Fabricated equipment costing $25,000 or more and having a useful life of one year or more must be accounted for as construction in progress (CIP) until completion. Fabricated equipment costing $5,000 to $24,999 and having a useful life of one year or more must be recorded as moveable equipment. Departments are responsible for properly tracking all costs to assemble the equipment. Please refer to the Constructed and Fabricated Equipment Policy (ID: 024-0006) for information regarding both capital and non-capital fabricated equipment

 

 

Facilities and Administrative Cost Rate (F&A)/Indirect Costs

 

Costs incurred to conduct normal business activities of the institution which cannot easily be identified with or directly charged to a specific sponsored project award. These costs may also be referred to as indirect costs, overhead or administrative costs. F&A rates are the mechanism used to reimburse Dartmouth for these costs. The rate calculation is based on expenses deemed allowable by the federal government Office of Management and Budget (OMB) as outlined in the Uniform Guidance.

 

 

Fixed Asset/Surplus Property Administrator

The individual in Procurement Services who is responsible for the overall completeness of Dartmouth moveable equipment records. This individual is responsible for making sure all equipment new to campus is tagged and entered into the Fixed Asset Module; that changes in location, transfers, sales, or disposal of equipment are recorded in the Fixed Asset Module; and that a biennial physical inventory is done for all equipment.

 

 

Fixed Equipment

Equipment permanently affixed to a building but separate from the building itself. Examples include building systems, light fixtures, and flooring.

 

 

Gift-in-Kind

Donation of a tangible or intangible asset other than cash or securities. Can be something consumable, such as office equipment or supplies; or something with a longer duration, such as books, artwork, or copyright interests.

 

 

Gift-in-Kind, Capital, or Non-Capital Asset

Donation to Dartmouth of a tangible asset other than cash or securities that has a useful life of more than one year and a value of $5,000 or more. Materials Management must be notified.

 

 

Government/ Corporate Property Control Tag

Special tag affixed to an asset to indicate the asset's ownership by a government or corporate entity.

 

 

Improvement (Land or Building)

Improvement refers to expenditures under $50,000 that will create an addition or expand a physical space, create an increase in capacity or efficiency, replace a major component or structural part of the property, adapt a property to a new or different use. This includes land improvements which are modifications to an outside area, other than repairs. Examples include sidewalks, parking lots, utility lines, and fences. Improvements are expensed unless they are over $50,000 and set up as a CIP.

 

 

In-Service Date

For purchased equipment or items, the in-service date is the date the unit(s) became operable. For CIPs, the in-service date is the date of Substantial Completion (see definition below).

 

 

Intangible Asset

Asset not having physical substance (examples: a patent, good will).

 

 

 

IRS Form 8282

Form that must be sent to the IRS and the donor if donated property (other than publicly traded securities) is disposed of within three years of the date of the gift and the donated property was valued on Form 8283 at more than $5,000.

 

 

IRS Form 8283

Form that a donor is required to attach to their tax return whenever they donate property (other than cash or marketable securities) valued at more than $500. If the property is valued at more than $5,000, the Gift Planning Office receives and signs the form, and returns it to the donor.

 

 

Land

Solid part of the earth's surface improved or unimproved.

 

 

Lease Buyout or Purchase

An option to buy a leased asset at the end of the lease term. Please reference the Property, Plant, and Equipment Policy (ID: 024-0001).

 

 

Lease, Finance

 

Installment payment agreement made to acquire property, asset(s), or moveable equipment. A lease is considered a finance-type lease under any of the following circumstances: ownership transfers to lessee at end of lease; lease contains bargain purchase option; lease period is a major portion of the asset's useful life; present value of lease payment equals or exceeds the asset's fair market value; the asset is so specialized that there is no alternative use to the lessor at the end of the lease term.

 

Financial Reporting must be notified of all leases to classify as finance or operating, as each is accounted for differently (grant funded leases must be tracked for audit purposes).

 

 

Lease Liability

A lessee is required to measure and record a lease liability equal to the present value of the remaining lease payments, discounted using the rate implicit in the lease (or if that rate cannot be readily determined, the lessee's incremental borrowing rate), pursuant to ASC 842.

 

 

Lease, Operating

Installment payment agreement that does not meet the criteria of a finance lease.

 

Financial Reporting must be notified of all leases to classify them as finance or operating, as each is accounted for differently.

 

 

Maintenance

Activities related to the repair and upkeep of an asset, with the intent of preserving the original useful life and function. Maintenance is expensed in the fiscal period the maintenance activity is performed.

 

 

Market Value

Cost to acquire an item in its current condition through an arm's-length transaction. Also referred to as "fair market value."

 

 

Moveable Equipment

Item that is neither permanently affixed to nor part of a building or building system. Examples include boats, centrifuges, microscopes, vehicles, etc.

 

 

Non-Capital Property/ Moveable Equipment

Includes all equipment that is not permanently affixed to a building (either a single piece or a system), has a useful life greater than one year and has a unit cost at the time of purchase of $5,000 to $24,999 (if donated or gifted, the fair market value when received). This equipment is not capitalized, but it is recorded as equipment in the Fixed Asset System for tracking and inventory requirements. This is necessary for government compliance and F&A cost proposal purposes. Please see the Moveable Equipment Inventory Policy (ID: 024-0011) for further information.

 

 

Obsolescence

Factor to consider when determining the disposition of assets. Assets are obsolete when no longer useful to Dartmouth.

 

 

Office Furniture & Fixtures

Modular components that make up a work area. Examples include panels, work surfaces, drawers, and overhead shelves. Individual components that cost less than $5,000 are not tracked in the Fixed Asset System and should be expensed when purchased. Individual components costing $5,000 or more should be identified with a bar code tag and tracked as a piece of moveable equipment.

 

 

On-Campus

Location that is Dartmouth-owned, operated, or affiliated. All Dartmouth facilities have an assigned location code in the Fixed Asset System.

 

 

OSP

An acronym used to describe the Office of Sponsored Projects at Dartmouth

 

 

Ownership Tag

Identification tag affixed to equipment with an acquisition cost below $5,000. These items are not subject to physical inventory requirements. Note: Collectibles are not required to be tagged.

 

 

Post Implementation Stage

Activities performed after asset acquisition. Includes data conversion, employee training/ travel, annual licenses and fees if related to a constructed asset, CIP. See Appendix F Constructed Asset Guidance and Constructed and Fabricated Asset Policy (ID:024-0006).

 

 

Preliminary Stage

Includes costs of planning and studies related to potential capital projects (constructed asset, CIP). This stage includes activities performed to explore opportunities for acquisition or construction of an asset. See Appendix F Constructed Asset Guidance and Constructed and Fabricated Asset Policy (ID:024-0006).

 

 

Principal Investigator (PI)

Has primary responsibility for managing sponsored project awards. Responsibilities include managing the work of the project and responsible spending of project funds.

 

 

Property

Any item, whether or not it is an operable or a complete unit, that was donated to Dartmouth or purchased with gift, grant, contract, or unrestricted general funds. Title is vested in Dartmouth unless there are specific provisions reserving rights for another party, such as when property is purchased with federal funds.

 

 

Renovation

Construction activity that changes and/or improves the function of all or part of a facility. May be capitalized if the actual cost is at least $50,000, or if the project adds usable space. Renovations costing less than $50,000 will be expensed in the current period as repairs and maintenance. See Construction in Progress (CIP) definition.

 

 

Replacement

The substitution of a similar part for an original part. If the replacement does not significantly increase the capacity, efficiency, or economic useful life of the original item than these costs, regardless of dollar amount, should be recorded as repairs and maintenance expense, not added to the value of the original asset, or recorded as a separate asset.

 

 

Repairs

Repairs and maintenance expenses are defined as any cost incurred to maintain the existing item that does not significantly increase the capacity, efficiency, or economic useful life of the original item. These costs, regardless of dollar amount, should be recorded as repairs and maintenance expense, and not added to the value of the original asset or recorded as a separate asset.

 

 

Right of Use Asset (Lease)

A lessee is required to record a right-of-use asset equal to the amount of the initial measurement of the lease liability, any lease payments made to the lessor at or before the commencement date, minus any lease incentives received, and any initial direct costs incurred by the lessee (pursuant to ASC 842-10-30-9 through 30-10).

 

 

Scrap (Recycled or Salvaged) Equipment

Item that can be recycled or broken down into parts for disposal or salvage. The disposal process is managed by Materials Management.

 

 

Software

Complete set of programs, procedures, and related documentation associated with a computer system. Software is considered intangible property and is not generally recorded in the Fixed Asset Module.  The value of pre-loaded computer software may be included in the cost of the equipment recorded in the Fixed Asset Module when the cost of the software is not separately identified on the invoice.

 

 

Special Collections

Works of art, rare books, historical treasures, or scientific specimens that are held for public exhibition, education, or research, rather than for financial gain. They are protected, preserved, and subject to a formal policy that recommends that the proceeds of items sold be used to acquire other items for collections.

 

 

Substantial Completion

The stage in the progress of the Work when the Work or designated portion thereof is sufficiently complete in accordance with the Contract Documents and applicable permits and approvals so that the Owner can occupy or utilize the Work for its intended use, with only minor punch list items remaining. The Work will not be considered suitable for Substantial Completion review, and the Contractor shall not be deemed to have achieved Substantial Completion until: (i) all Project systems included in the Work have been started up, tested, and are operational as designed and scheduled; (ii) to the extent reasonably required, the Contractor has instructed Owner's personnel in the operation of all systems and equipment; (iii) the site has been cleaned up and complete reclamation, including without limitation removal of excess materials, rock, sand, paving, debris, dumpsters, supplies, equipment and trailers, and disconnection of temporary utilities, and (iv) the Contractor has arranged for and obtained all designated or required governmental inspections, written approvals, and certifications necessary for legal use and occupancy of the completed Project.

 

 

Surplus Equipment

Item that is no longer needed or required. The disposal process is managed by Materials Management.

 

 

Transferee

Entity or person who is receiving title or custody of property.

 

 

Transferor

Entity or person who transfers or conveys property.

 

 

TTO

An acronym used to describe the Technology Transfer Office at Dartmouth.

 

 

Upgrades

A change, modification, or improvement made to a piece of equipment that improves capacity, capability, efficiency, or useful life. Upgrade costs of $5,000 or more are added to the original capital or non-capital equipment. 

 

 

Useful Life

Period over which a capital asset has use to Dartmouth in performing the function for which it was purchased. For a chart of useful lives by asset class see Appendix B Useful Life and Depreciation.

 

 

 

Appendix B: Useful Life and Depreciation  

Policy: Property, Plant and Equipment (ID 024-0001)
Summary

Dartmouth acquires physical assets (property, plant & equipment) in pursuit of its mission. These assets must be recorded, depreciated, and inventoried in accordance with federal regulations, generally accepted accounting principles (GAAP) and good business practice. Assets (non-capital/expensed) with a value between $5,000 and $24,999 are recorded in the Fixed Asset Module and assigned a useful life over which they are subject to periodic inventories but are not subject to depreciation (useful life is for the F&A proposal).  Assets (capital) with a value greater than or equal to $25,000 are recorded in the Fixed Asset Module and are assigned a useful life over which they are depreciated and subject to periodic inventories. Assets (constructed, renovated, or fabricated - CIPs) with a value greater than or equal to $50,000 are recorded in the Fixed Asset Module by "component," each of which is assigned a useful life over which it is depreciated. 

Depreciation

Depreciation is a non-cash expense that is calculated and allocated on the financial statements over the useful life of applicable assets. This is due to GAAP's matching principle, which states that expenses should be recorded in the same period in which revenue is earned.  
Dartmouth elects to use the straight line full-year convention method of depreciation.  Assets purchased or in use by December 31st (12/31) are depreciated a full year in the current fiscal year regardless of the month placed in service. Assets purchased or in use after 12/31 do not begin depreciation until the following fiscal year. 
Note: Depreciation does not change how a department's expense is recorded for the purchase of capital assets. The expense is recorded when the invoice is processed by Accounts Payable, or the manual fixed asset journal entry is processed by the Financial Reporting – Financial Analyst responsible for fixed assets.

Schedule of Useful lives

Capital Moveable Equipment ($25,000 and greater)

  • Computers - Three (3) Years 
  • Furniture - Ten (10) Years
  • Software and Technology - Five (5) Years (servers)
  • Vehicles - Five (5) Years
  • Other Equipment - Seven (7) Years (anything not in a specific category listed above)

Non-Capital Moveable Equipment ($5,000-$24,999)

  • Audio Visual - Three (3) Years
  • Building Systems - Ten (10) Years (security, fire suppression, lifts, and elevators)
  • Computers - Three (3) Years
  • Furniture - Ten (10) Years
  • Hardware and Peripheral - Three (3) Years
  • Office Equipment - Five (5) Years
  • Other Equipment - Seven (7) Years (athletic, food service, safety, shop, maintenance, and anything not in a specific category as listed)
  • Scientific - Seven (7) Years
  • Vehicles - Five (5) Years

Constructed, Renovated or Fabricated – CIPs ($50,000 and greater)

  • Buildings and Building Components - Thirteen (13) to Fifty (50) Years
  • Fixed Equipment - Five (5), Ten (10), Fifteen (15), or Twenty (20) Years
  • Furniture - Ten (10) Years
  • For Moveable Equipment see Capital Moveable Equipment.
     

Appendix C: Additional Guidance for Specific Types of Equipment 

Policy: Property, Plant, and Equipment (ID: 024-0001)

Chart String Use and Fixed Asset Module Processing

Audio Visual System(s) An Audio Visual (A/V) system purchase or upgrade typically consists of several individual pieces of equipment, supplies, and other items including engineering, design, and installation costs, which need to be accounted for in Oracle.  Individual items are often moved from one room to another, are disposed of and replaced, or are un-taggable and not able to be tracked and inventoried. Therefore, when processing audio visual requisitions, please abide by the following guidance:

  • If the cost of an individual line item is under $5,000 it is expensed and not recorded in the Oracle Fixed Asset Module.  
    • Exception: If the individual line items are to be assembled into a single unit with an aggregate cost of $5,000 or greater, the assembled unit will be accounted for as one asset. For the applicable line items, use the appropriate natural class as detailed below.
  • Software, design, engineering, and installation costs are expensed as incurred.
  • If the cost of an individual piece of equipment (monitor, video camera, screen, etc.) is between $5,000 and $24,999, it is considered non-capital/moveable equipment and is recorded in the Oracle Fixed Asset Module and is subject to being tagged and inventoried.  
  • If the cost of an individual piece of equipment (monitor, video camera, screen, etc.) is $25,000 or more it is considered capital/moveable equipment, recorded in the Oracle Fixed Asset Module and subject to being depreciated, tagged, and inventoried.  
  • If the purchase is part of a Capital Project (CIP), use natural class 1724-CIP CONST Moveable Equip.

Audio Visual System(s) Chart Strings for Reference:
     Under $5,000 -                                 7032-EQUIP UNDER 5000 Audio Visual
     Between $5,000 – $24,999 -            7112-EQUIP 5000 to 24999 Audio Visual
     Over $25,000 -                                 1700-Oracle Fixed Assets Clearing
     Design/Engineering/Installation -    7748-PROF FEES Instr Audio Visual Srvcs
     Software -                                         7505-SUPPLIES Computer Software or 7331-MAINT CONTR Software Maint or License (only capitalized as part of IT CIP Project)

Accessories: An item which can be added to make an existing piece of equipment more useful or versatile. The cost of an accessory purchased separately after the original equipment has been received and made operable should not be added to the value of the original piece of equipment in the Fixed Asset Module. If an accessory meets all the criteria of non-capital or capital property (i.e., it is tangible property having a useful life greater than one year and an acquisition cost of $5,000 or more), it should be treated as a separate item of equipment. 

Accessories Chart Strings for Reference:
     Under $5,000 -    70XX-EQUIP UNDER 5000 
     Between $5,000 – $24,999 -    71XX-EQUIP 5000 to 24999 
     Over $25,000 -    1700-Oracle Fixed Assets Clearing or 75XXA-CAP EQUIP OVR 25K for PTAEOs

Additions: Acquisition of new assets, or improvements or modifications to existing assets that increase the useful life or the service potential of the asset. Examples include an addition to a building or renovations to repurpose the space; adding a new part or feature to an existing piece of equipment that increases functionality. When processing requisitions for additions to existing equipment/assets, please abide by the following guidance:

  • The natural class used for the addition should be the same as the natural class used for parent item.
  • The purchase requisition should reference that the item is an addition and the parent asset tag number (in both the description and notes).

Additions Chart Strings for Reference:
Between $5,000 – $24,999 -    71XX-EQUIP 5000 to 24999 
Over $25,000 -    1700-Oracle Fixed Assets Clearing or 75XXA-CAP EQUIP OVR 25K for PTAEOs

Upgrades: A change, modification, or improvement made to a piece of equipment that improves capacity, capability, efficiency, or useful life. Upgrade costs of $5,000 or more are added to the original capital or non-capital equipment. When processing requisitions for upgrades to existing equipment/assets, please abide by the following guidance:

  • The natural class used for the upgrade should be the same as the natural class used for parent item.
  • The purchase requisition should reference that the item is an upgrade to existing equipment (either in the description or notes).

Upgrades Chart Strings for Reference:

  • Under $5,000 -                         70XX-EQUIP UNDER 5000 
  • Between $5,000 – $24,999 -    71XX-EQUIP 5000 to 24999 
  • Over $25,000 -                         1700-Oracle Fixed Assets Clearing or 75XXA-CAP EQUIP OVR 25K for PTAEOs

 

Appendix D Procurement Decision Tree (see below) 

 

Appendix E Thresholds and Chart String Guidelines

Policy: Property, Plant and Equipment (ID 024-0001)

Summary

The threshold for tracking property in Oracle's Fixed Asset Module is $5,000. The property must also have a useful life of more than one year and not be obtained for investment or resale. Dartmouth has defined distinct types of assets, each of which is handled differently in Dartmouth's accounting system. 
 

Threshold by Property Type

  • Non-Capital property/moveable equipment $5,000-$24,999.
  • Capital property/equipment equal to or greater than $25,000.
  • Construction in Progress (CIP) with budget equal to or greater than $50,000.
  • Land is capitalized regardless of value.
  • Fabricated property/equipment $5,000 or greater. For fabricated equipment meeting the threshold above, an Intent to Fabricate Form must be completed. For fabricated equipment with an estimated total cost of over $25,000, a CIP must also be established to account for the costs.
  • Leased property/equipment equal to or greater than $100,000 is subject to capitalization. However, grant-funded leased property costing greater than $5,000 must be tracked in the Fixed Asset Module.

Accounting Treatment

When deciding which natural class to use when purchasing property, plant, or equipment, use the following guidelines: 

  • Non-Capital Property/Moveable Equipment Under Threshold If the item(s) you are purchasing are individual items that work on their own, use the dollar amount for each item to determine the natural class.  For example, if you are purchasing ten rowboats at $4,000 each, with a total invoice of $40,000, you would choose a natural class in the "under $5,000" category. The total invoice amount is not relevant if each piece works on its own. 
  • Non-Capital Property/Moveable Equipment If you are purchasing multiple individual items that will be combined to form one piece of equipment or an equipment system, use the dollar amount of the combined items to determine the natural class. For example, if you are purchasing five items at $4,000 each with a combined invoice amount of $20,000 and all items will form one unit, you would choose a natural class in the "$5,000 to $24,999" category. 
  • Capital Property/Equipment If the item(s) being purchased (single piece of equipment or equipment system) * has a purchase price of $25,000 or higher it would be considered capital equipment.  You would then choose (1) natural class '1700-Oracle Fixed Asset Clearing' on GL strings or (2) an expenditure type in the "CAP EQUIP OVER $25K" category on PTAEOs.
  • See Appendix C Additional Guidance for Specific Types of Equipment 
    • Audio Visual Systems - Although an audio-visual system total combined cost is often greater than $25,000, a system generally consists of individual items of varying cost and may include items that are not considered to be part of the equipment cost. Therefore, each item would be evaluated separately to determine the correct natural class usage. 
    • Accessories – An item which can be added to make an existing piece of equipment more useful or versatile which is purchased separately after the original equipment has been received and made operable should not be added to the value of the original piece of equipment. If an accessory meets all the criteria of non-capital or capital property it should be treated as a separate item of equipment. 
    • Additions - Acquisition of new assets or improvements or modifications to existing assets that increase the useful life or the service potential of an existing asset that cost over $5,000 are added to the original capital or non-capital equipment.  Examples include an addition to a building or renovations to repurpose the space or adding a new part or feature to an existing piece of equipment that increases functionality. 
    • Upgrades - A change, modification, or improvement made to a piece of equipment that improves capacity, capability, efficiency, or useful life that costs $5,000 or greater is added to the original capital or non-capital equipment. 
  • Leased Equipment/Vehicles
    • If leasing vehicles or equipment, please contact Financial Reporting for proper accounting treatment and asset tracking as the accounting for each lease is dictated by the terms of the individual lease agreement. Generally, if the right to use the item(s) covered by the lease has a value of $100,000 or higher, it will be treated as capital equipment and tracked in Oracle's Fixed Asset Module. Use natural classes '8642-DEBT SERV PRIN Capital Leases' and '8612-INTEREST EXTERNAL Capital Leases' as directed by Financial Reporting to record each lease payment. If the lease does not meet this threshold, a rent expense natural class would be appropriate. If leasing multiple individual items that work on their own under one lease agreement with a total aggregate right of use value of $1,000,000 or higher, the lease would be treated as prescribed above. However, grant-funded leased equipment/vehicles with a cost of $5,000 or higher must be tracked in the fixed assets system regardless of the natural class used. For guidance with lease buyouts, see the Property, Plant, and Equipment Management Policy.

What to Include in Equipment Natural Classes

Installation and freight are to be included in the equipment natural class.  Consumable supplies, warranty, training and design or engineering services invoiced along with an equipment purchase are NOT considered to be capital equipment; if these costs are identifiable, please record in a supply, warranty, purchase services, or professional fees natural class. 

What Not to Include in Equipment Natural Class

If the items being purchased are consumable (replaced on an annual or regular basis), such as lab supplies, uniforms, or maintenance and repairs materials, please use a supplies or repairs and maintenance natural class rather than an equipment natural class. 

Construction in Progress (CIP)

If purchasing CIP related goods or services, use Org 003-Capital Projects combined with the specific funding and activity assigned to the CIP, and the appropriate CIP natural class. See the Dartmouth Constructed and Fabricated Asset Policy (ID 024-0006), Appendix F Constructed Asset Guidance for Specific Costs, Appendix H Capital Projects Natural Class Guidance, and the Dartmouth Finance website, Capital Projects, for additional guidance, including natural class definitions and usage instructions.

How to Obtain Natural Class Values

A list of Natural Class Values may be obtained by accessing the Institutional Reporting and Analysis (IRA) tool, navigate to the 'Lookups' section, select 'LU001 – Segments Lookup Dashboard', run the 'Natural Class Segment Lookup' report. 

  • For non-capital and capital property/moveable equipment natural classes filter by NatClass L4 D702 EQUIP FURN AND FIX UNDER 5000 or D710 EQUIP FURN AND FIX 5000 TO 24999. 
  • For CIP (capitalized purchases) natural classes filter by L4 D170 CONSTRUCTION IN PROGRESS. 
  • For CIP (expendable purchases) natural classes filter by NatClass L5 E547 NONOPERATING NONCAP EXPENDITURES. 
     

Appendix G: Equipment/Asset Purchase with Trade In Credit

Policy: Property, Plant and Equipment (ID 024-0001)

Summary
All quotes or purchases that include a trade-in of equipment require separate line(s) for the full amount of the item(s) being purchased and a separate line for the amount offered for the item(s) being traded in. Any additional discounts offered must not be combined with the trade in amount. In addition, the vendor/supplier is required to issue an Invoice for the full amount of the new item purchased and a separate Credit Memo detailing the terms of the agreed upon Trade-In. See the Property Disposition Policy (ID 024-0008) for required instructions and forms for trade-in processing. *Note: The Credit Memo must include Make, Model and Serial Number of item(s) being traded in.

Requisition and Purchase Order (Req/PO) Processing:
Req/PO is created for full amount of the new equipment before deduction for trade in. 

Invoice & Credit Memo Processing:
Submit the PO-Invoice payment request for the invoice, which must be for the full amount of the PO. 

Submit the credit memo on an invoice payment request to the same chart string as the PO.  The credit memo should be for the value of the trade in. If the sole source form, completed Equipment/Asset Transfer Request Form (must be completed and submitted before equipment leaves Dartmouth), and the quote were attached to the requisition or a purchase request, you do not need to attach anything other than the credit memo to the payment request.  If these documents were not attached to the requisition or purchase request, attach them to the payment request.

Caution: The timing of the payment request and credit memo request is important to make sure both the PO invoice and credit memo are both entered together before the next check run, so the check is not cut for the full amount of the PO invoice.

Note: For equipment over $25K, be sure the credit memo payment request has international wire selected from the Special Handling drop down menu, so the request is sent to Accounts Payable. An email should also be sent to Accounts Payable letting them know that a trade-in credit request is being sent for processing. The credit memo request must go to Accounts Payable. 

Fixed Asset Module Processing:
The new asset is recorded in the Fixed Asset Module for the full amount invoiced not including the trade in credit amount.

The credit memo is added to the asset(s) traded in in the Fixed Asset Module. The assets traded in are retired in the Fixed Asset Module using the information from the completed Equipment/Asset Transfer Request Form submitted prior to the equipment leaving Dartmouth. 

Contact Information
Financial.Reports@Dartmouth.edu
Materials.Management@dartmouth.edu 
 

Appendix I Corrections to PTAEO or Chart String 
Policy: Property, Plant, and Equipment (ID 024-0001)

Correction Request Guidelines for Departments
Corrections for Non-Capital or Capital Property/Equipment (over $5,000) cannot be made using a manual journal entry.  They must be processed through Accounts Payable. This includes transactions posted to an incorrect chart string including these natural classes or equivalent expenditure type: 

  • 1700-Oracle Fixed Assets Clearing 
  • 7111 to 7171- EQUIP 5000 to 24999 
  • 7561 to 7587 - CAP EQUIP OVR 25K 

To request a non-capital or capital property/equipment correction complete the OnBase Corrections, Journals and Cost Transfer e-form.  Add the responsible Financial Reporting - Financial Analyst as an approver. Attach the IRA GL Transactions report Correction View, or OGA Transaction Detail - Expenditures report showing the transaction(s) to be moved.  If the correction includes a PTAEO string, the e-form must also be routed through OSP for their approval. 
 

Policy ID

024-0001

Effective Date

July 1, 2008

Last Revised Date

November 30, 2022

Division

Finance & Administration

Office of Primary Responsibility

Finance

Office(s) of Secondary Responsibility