• Overview
• Purchasing New Equipment (includes section on tagging property)
• Attachments/Components
• Prepayment for Equipment
• Leasing/Renting Equipment
• Installment Purchases
• Gifts of Equipment
• Trade-In of Old for New Equipment
• Government Furnished Property
• Borrowing from Non-UO Entities

Overview

Each department at the UO has the authority to obtain equipment and supplies needed to achieve the mission of the University. However, there are instances where specific items must be added to the inventory records. This section will provide you with information pertinent to obtaining equipment and updating the inventory records. 

Purchasing New Equipment (includes section on tagging property)

The Purchasing and Contracting Services department has established rules and guidelines that apply to all purchases of equipment and supplies. Click here for a link to the Procurement/Contracting web page. When processing an invoice in the Banner system to pay for the purchase of minor equipment (unit value is $5,000 or less), use 20200. Invoices for capitalized equipment (unit value is more than $5,000) should be processed using account codes 4010X acct code series (service centers and auxiliaries use acct code series A80XX). Before completing the invoice, include the necessary information in the text field of the invoice to assist with the updating of inventory records.

If the Foundation writes the check for the purchase of equipment, and the equipment meets the criteria for capitalization ($5,000 or greater and a life expectancy of more than one year), then an Asset Maintenance Form is to be completed and forwarded to Property Control to add the equipment to the Banner inventory records.(See Gifts of Equipment under Obtaining Equipment on the Property Control web site.)

Property Control is responsible for updating the fixed asset inventory records. On a periodic basis, the Property Control Manager runs an extract program in Banner to identify invoices processed using capital equipment account codes. OUS policy indicates that all capitalized equipment purchases are to be added to the inventory records. Property Control uses the information entered in the text field for capital asset purchases to update the inventory records. Therefore, it is important that all of the information pertinent to the capitalized asset be included in the text field of the invoice. The following is a list of the information to be included in the text field of the invoice for capitalized equipment (Note: There may be additional information required as part of the regular purchasing process. Refer to Purchasing Policy.)

• Description of equipment purchased with the noun, or what the item is, listed first.
• Inventory tag number assigned to asset (see Tagging Equipment section below for specifics)
• Organization code
• Location code
• $ value of asset
• Serial number
• Model number
• Manufacturer (if different from vendor)
• Information to calculate the percentage of federal participation in the cost of equipment (if purchased with more than one fund source) contact ORSA for specifics.
• Date that the asset is put into service.

Note: There may be additional steps/approvals required as part of the purchasing process. These may include, but are not limited to, completing an Request For Proposal, filing an Invitation To Bid, or obtaining Department of Justice approval even if purchased on a grant or contract. Be sure to check out the Purchasing link above for the current purchasing guidelines.

Approval Levels

There are various levels of approval that may be required for the purchase of an asset. For the complete and updated guidelines regarding purchasing approvals, please refer to the Procurement/Contracting web page.

Hard Copy Documentation To Maintain

After a department has purchased and paid for capitalized equipment, there are specific hard copy documents that should be maintained as supporting documentation. These documents must be retained for inventory purposes:

• Purchase order (electronic copy or hard copy)
• Vendor’s Invoice (remember to note the Invoice Document Number assigned by Banner on the vendor’s invoice)

Note: There may be additional documentation required by the purchasing process. Click this link to go to the Purchasing and Contracting Services web page specific to documentation (OAR 571-040-0390). Check out the purchasing web page prior to destroying documentation.

Adding Assets to Fixed Asset Inventory Records

Property Control is responsible for adding, changing, and deleting capitalized assets from the inventory system. When an invoice is processed using capital equipment account codes, the invoice is routed to an approval queue that is monitored on a daily basis by Property Control. In addition, on a weekly basis, the Property Control Manager will run a program that extracts asset purchase data. Each asset item purchased is then added to the inventory records using the extracted information and the invoice data in Banner. Therefore it is important that you provide all of the necessary information or the invoice may not get approved, thus delaying payment to the vendor.

Government Acquired Property

Property purchased with state funds is considered UO property. Property purchased with federal grant funds is considered government acquired property provided to the University for use with a specific grant or contract. There are guidelines that govern all government property, and in some cases each granting agency may have their own specific regulations regarding ownership of government acquired property (Federal Acquisition Regulations 52.245, OMB Circular A-110). It is important that we properly account for and track government acquired property. Failure to do so could prevent the University from receiving future grant funding.

When an asset, regardless of value, is purchased using grant funds, the department must include in the text field the granting agency (supplier of grant funds), and the grant or contract ID number. When a capitalized asset is purchased, the home department will need to follow the purchasing and invoicing guidelines as noted above with the following exceptions:

• Federal property must be tagged with a federal property tag (green tag) identifying the grant/contract agency, and the grant/contract ID number.
• Indicate in text field that the property is "government acquired property". To make this determination you can review the grant agreement or contact the Office of Research Services Administration for assistance.

There are certain instances where federally owned property will become University owned property at the end of the grant. The grant agreement will either indicate that the University retains title at the end of the grant, or the University has conditional ownership at the end of the grant. If the University has conditional ownership, the granting agency has a period of time in which to transfer the property to a different grant; otherwise the University retains title of the property. A typical period of time is 90 days. If you have trouble determining ownership of property purchased with grant funds, refer to the ORSA Manual or contact ORSA directly at 6-5131.

Tagging Equipment

The final step to be performed for new purchases is to affix a permanent tag to the asset with a unique inventory tag number. Currently departments are required to tag all capitalized equipment with a yellow university property tag (note: Federal property must have a yellow and a green tag). The inventory tag number is a unique number used to identify the asset within the fixed asset records and should be assigned to the asset at the point the item is ordered or received. A department can obtain a block of blank inventory tags and inventory numbers from the Property Control Manager. The inventory tag should include the following (please use permanent ink!):

University property (yellow tags)

• Inventory number

Federal property (green tags)

• Grant/Contract Agency (i.e., NASA, NIH, etc.)
• Grant/Contract ID Number (use Banner form FRIGRNT)

Inventory tags should be affixed to the asset in a location that is easily visible regardless of the position of the equipment. Do not affix tags to the bottom or back of items that cannot easily be moved. Don’t forget to include the inventory number in the text field of the electronic invoice. See the Attachments/Components section below for tagging attachments and components.

Attachments/Components

Equipment that is related to, or an integral part of, another asset is considered an attachment or component of the parent asset. When a department purchases an attachment or component, see What Is Equipment section for a complete definition, do the following:

After you purchase the attachment/component, include in the electronic invoice text field all of the information noted in the Purchasing New Equipment section above. In addition, indicate if the item is an attachment or a component, and to which asset the item is related. NOTE: This process applies to all attachments/components regardless of value.

NOTE: Due to a limitation of the fixed asset system, attachments can only be added to the parent asset in the same fiscal year the parent asset was added to inventory. Therefore, if you did not buy the attachment in the same fiscal year as the parent asset and the value of the attachment is greater than $5,000, treat the equipment as a separate capital asset. If the value is less than $5,000, treat the equipment as minor equipment.

Tagging Attachments/Components

The same guidelines noted in the Tagging Equipment section above apply to attachments and components with the following exceptions:

• Components must have a unique inventory tag number that is different from the parent asset. Attachments use the same number as the parent asset
• If a component is an internal portion of the parent asset (not easily visible), it is recommended that the tag be placed next to the parent asset’s tag

Documentation To Maintain

The same guidelines noted in the Purchasing New Equipment section above apply to attachments and components.

Prepayment for Equipment 

There are times when a vendor will ask that a down payment be made in order for a piece of equipment to be manufactured.

This is allowable, as long as there is a positive history with the vendor, i.e., the University has done business with this vendor for a period of time and the merchandise purchased has met University standards for quality and longevity.

However, when a prepayment is processed, the equipment does not exist. Since we have implemented depreciation on capital equipment, equipment that does not exist should not begin accruing depreciation.

If a capital account code is used for the prepayment, the payment will hit the general ledger and be created in the Fixed Asset module, thereby creating a reconciling item on the depreciation records, as no depreciation will be taken since the capital item will not exist.

To prevent this from occurring, for capital equipment that the vendor requires a prepayment on, please use account code A5030.   This account code will work with both general and proprietary funds.   

When the equipment has been delivered, installed and determined to be suitable for the needs of the department, a journal voucher will need to be processed to change the A5030 account code to the appropriate capital account code for the fund(s) involved. At this time, all the inventory information for the equipment should be entered in the text field of the journal voucher.

Leasing/Renting Equipment

Where cost effective, the University will purchase equipment; however, there are instances when leasing or renting equipment is more economical. All leased and rented equipment must be added to the inventory records, regardless of the equipment value or the term of the agreement. In this section we will address the differences between a lease and a lease purchase agreement, a capital lease and an operating lease, and how and when to notify Property Control of new lease or rental arrangements.

The department leasing or renting the equipment is responsible for deciding on/agreeing to the technical terms (i.e., price, term of agreement, equipment specifics, etc.) of the lease with the vendor. After agreement on the terms is reached, the agreement should be routed to the Business Office Contracts Manager for final approval, signature, and retention of the original document. For specific information regarding the contract process, see the Contracts web page.

The Accounting Department will determine if the agreement is a capital or an operating lease and notify the Property Control Manager. The Property Control Manager will communicate the classification to the department to ensure that the proper account entries are recorded in Banner.

If you are leasing a photocopier please refer to the purchasing/contracting web page regarding copiers for more information. Procurement/Contracting

Below are two categories of agreements: Rental or operating leases, and capital lease agreements. Decision tree for categorizing leases. There are different processes and account codes to use with each type. Property Control will notify the department when an agreement is approved and the classification is determined. The department should follow the steps as noted below based on the agreement classification obtained from Property Control.

Accounting Entries for Operating Leases or Rental Agreement

If the lease is determined to be an operating lease, the leasing department must complete and route an Asset Maintenance Form to the Property Control Manager. When the lease payments are made, use account code 24001 for all payments. NOTE: An Asset Maintenance Form is required in this case because invoices with account code 24001 are not routed to the Property Control approval queue. Therefore, the only way to document the existence of a new operating lease is to use this form.

Leased and rented property is considered non-owned property in the possession of the University. It is important that this property be added to our inventory records. In the event of a major disaster, the inventory records would identify the property needing be replaced.

Accounting Entries for Capital Leases

For all capital leases, a liability for the value of the lease should be established in Banner. Then subsequent lease payments are processed against the liability. When a department has a capital lease there are two steps, one to establish the liability and one to liquidate (make payments against) the liability.

To establish the liability the department will need to process a JV. The value you use to establish the liability should only be the principal value of the lease excluding any interest. Include in the text field information about the asset (asset number, description, make, model, serial #, etc.), as noted in the purchase of equipment section of this manual. If you need assistance contact Martha Schumacher in the Business Office at 6-3524.The following is a sample JV:

            Index                Acct Code

DR        Your Index        40101 - Non-proprietary funds

                                    A8011 - Proprietary funds

CR        Your Index        B2102 - Liability

Note: Proprietary funds are service centers (09xxxx funds) or auxiliaries (1xxxxx funds).All other funds are non-proprietary.

When processing payments for a capital lease, you will process an invoice in the Banner system and use account code B2102.The interest portion of the payment should be to account code 28810 - Interest expense.

Renewing/Terminating An Existing Lease

Each department has the ability to renew or terminate a lease pursuant to the terms of the lease agreement. The renewal of a lease should be treated as a new lease and follow the steps noted above for new leases.

However, if a department terminates a lease, it is the department's responsibility to notify Property Control to remove the item from inventory, using a Property Disposition Request (PDR). Indicate on the PDR that the "lease was terminated". Route the completed PDR to the Property Control Manager, who will remove the item from the inventory records.

Changing Or Replacing Leased Equipment

On occasion, leased property will need to be changed or replaced. The inventory records also need to be updated as appropriate. The home department is responsible for completing a PDR for the old equipment (to update the inventory records). Indicate on the PDR that the "leased equipment is being replaced". The information for the new equipment should be included in the text field of the electronic invoice for the next payment on the lease.

Insurance for Leased Property

Generally, most leased property is covered by insurance through the University. However, on occasion the vendor will insure the equipment. If this is the case, indicate in the text field of the electronic invoice for the first payment that the vendor is insuring the equipment.

Lease Purchase Agreements

Follow the same process as a regular lease noted above. At the end of the lease, if a department decides to exercise the option to buy the leased property, then the department needs to complete an Asset Maintenance Form indicating that the asset is no longer a lease purchase status but "purchased". Forward the completed form to Property Control for processing. 

Note: Property obtained through a lease needs to be tagged in the same manner as University purchased property; however, there are instances when placing a UO property sticker on leased property would be inappropriate. In these cases, the department should affix the property tag to a piece of paper and tape the paper to the item.

Installment Purchases

An installment purchase is similar to a lease; however, the intent is to purchase the item on a payment plan, as opposed to leasing the item and deciding to purchase at the end of the lease. You will need to establish a liability and make payments to the liability the same way as a capital lease noted above. The liability should be set up for the full purchase price of the asset, excluding any interest, using account code B2105.

Gifts Of Equipment

Private individuals and corporations have the option of giving equipment directly to the University or through the UO Foundation as a gift. Since the receiving department did not purchase the equipment, there is no electronic invoice generated to notify Property Control of the new asset. As a result, the department will need to follow the steps noted below to ensure the asset is added to the inventory records. NOTE: There are specific IRS requirements when disposing of gifted equipment. Prior to disposing of gifted equipment, review the Surplus Property section.

1. Complete an Asset Maintenance Form (only for gifts in excess of $5,000)
2. Obtain an appraisal for gifts in excess of $5,000 (the donor is required to furnish the University with the appraisal if they claim the value is $5,000 or more).
3. If the asset item was not donated to the department through the UO Foundation but given directly to the UO, then the department will need to complete a UO Report of Gift Received by Department form.
4. Route the completed Asset Maintenance Form to the Property Control Manager and the Report of Gift in Kind to the Cashiers Department in the Business Affairs Office.
5. Affix a property tag to the equipment (see the Tagging Equipment section above for specifics).

Documentation To Maintain

The home department is responsible for retaining a copy of the Asset Maintenance Form, any letters or correspondence from/with the donor, a copy of the Gift in Kind report, and a copy of the appraisal.

Trade-In of Old for New Equipment

Webster’s dictionary defines a trade-in as "merchandise accepted as partial payment for a new purchase". When a department chooses to purchase new equipment using existing capitalized equipment as partial payment, the following process applies:

The process consists of removing the old asset from inventory and replacing it with the new asset.

1. Prior to trading in the equipment, the home department should determine if the item to be traded in is federally owned property or property obtained by gift. If federally owned, additional regulations apply to the disposal; refer to the Surplus Property section for specifics. If the item was gifted to the University, additional IRS regulations may apply; refer to the Disposal of UO Property for specifics.
2. The department is responsible for establishing agreement with the vendor on the value of the trade-in. The department should ensure that the trade-in value is the best value obtainable, and in the best interests of the University (consider contacting multiple vendors to establish the value of trade-in).
3. The home department should inquire with the vendor about obtaining two invoices to document this transaction. One invoice would be for the new asset, indicating the full purchase price of the item; the second would be a credit memo for the value of the trade-in. If the vendor is unwilling or unable to issue a credit memo for the trade-in, then the home department should make a photocopy of the invoice with the full purchase price and document the value of the trade-in on the photocopy.
4. Once the vendor and the department have reached an agreement, the following steps need to be performed to process the payment and update the inventory records:  
   1. Prepare a purchase order for the new equipment (on-line or hard copy) using the full purchase price of the item being purchased. See FIS PO Processing Procedures for purchase order preparation procedures. Include in the text field a statement indicating that the item is being obtained through a trade-in, and the inventory number of the asset item being traded in.
   2. Process a credit memo using account code 79391 for state and grant funds, 09391 for service center funds, or 06980 for all other funds for the value of the trade-in as noted on the second vendor invoice.
   3. When the invoice is processed for the new equipment, you will need to process the full amount to be paid and the credit memo at the same time. This results in the net amount being paid to the vendor, with documentation supporting the full cost of the equipment.
   4. Finally, complete a PDR to remove the item being traded-in from the inventory records. The PDR must include a signature from a vendor representative indicating that the vendor has possession of the old item. Route the completed form to the Property Control Manager. NOTE: Be sure to document the inventory number of the newly purchased item, and the purchase order number of the on-line purchase order on the PDR, or attach a photocopy of the hard-copy purchase order.

The Property Control Manager will use the information on the invoice to add the new asset item. The old asset status will be updated to reflect "disposed", when Property Control receives the completed PDR. REMINDER: You need the signature from the vendor (indicating the vendor took possession of the old asset) on the PDR before it is considered complete.

Government Furnished Property

When the University obtains property from a federal granting agency, there are federal guidelines that govern the ownership, maintenance, and disposition of the property (Federal Acquisition Regulations 52.245, OMB Circular A-110).

This section addresses the issues specific to government furnished property. This is defined as property that is not purchased by the University, but, is supplied to the University for use in research. When the government furnishes property to the University, regardless of the value, the University must record this property in the fixed asset inventory system. However, the federal government retains ownership of the item while at the University.

The responsible department must complete an Asset Maintenance Form. The completed form is routed to the Property Control Manager for entry into the inventory system. Please indicate the grant agreement number or fund number on the form. The asset will need to be tagged with a green federal property tag (see the Tagging Equipment section above). NOTE: When disposing of government furnished property, the department is required to obtain approval from the granting agency prior to the disposal of the property (see the Surplus Property (Disposal of Federal Property) section for specifics).

Borrowing From Non-UO Entities

When personal property is lent to or borrowed by the University for official use, all arrangements must be approved in writing by the Department Head of the department using the equipment, and the Business Office Contracts Manager.

When equipment is borrowed for more than ninety (90) days, regardless of the value, a Personal Property Loan Agreement must be completed. In addition, the department will need to complete an Asset Maintenance Form to add each item to inventory. The completed forms should be routed to the Property Control Manager. The agreement will be reviewed and approved by the Business Office Contracts Manager. The Property Control Manager will update the inventory records as appropriate and route the original agreement back to the department. If the loan period is less than ninety (90) days, only the Personal Property Loan Agreement is required.