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Property Capitalization Threshold Change – Financial Reporting Update

Learn about the changes in the capitalization threshold for property assets, effective July 1, 2011. Find out how this affects different types of assets and the implementation plan for tracking items below the new threshold.

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Property Capitalization Threshold Change – Financial Reporting Update

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  1. Financial Rep Meeting July 13, 2011

  2. Property Capitalization Threshold ChangeMichael Williams

  3. What is the change? Current Definition of a Capital Asset – Tangible personal property which has an acquisition value of $1,000 or more with an expected useful life of one year or more. Effective July 1, 2011 the acquisition threshold increased to $5,000.

  4. To what types of property does this apply? • Includes: • Tangible personal property, e.g. • Furniture & equipment • Artwork and historical treasures • Motor vehicles and watercraft • Musical instruments • Software (on a per-user basis) • Additions, improvements and other outlays that significantly extend the useful life of an asset • Excludes: • Library materials and books ($250 capitalization threshold) • Buildings ($100K) • Internally generated intangibles, e.g. Software ($1 million)

  5. What is the implementation plan? • Purchase Orders created prior to July 1, 2011 • Property with a cost of $1,000-$4,999 with an asset profile attached will be corrected when the voucher is created. • Property Accounting Services will monitor this process. • Departmental Managers should review their ledgers and notify PAS if they discover a capitalized asset with a cost less than $5K. • Indirect Cost • Sponsored project purchases of property with a cost of $1,000-$4,999 will not incur F&A overhead charges for FY 2011-2012. • All grant proposals should continue to use a $1K capitalization threshold for equipment budgets for FY12. • Budget • Budget Managers should take threshold change into account when budgeting for OCO expenditures in FY12.

  6. What is the implementation plan? (cont.) • Property Management • Property with a cost less than $5K received on or after July 1, 2011 will not be tagged, tracked or physically inventoried. • Previously received property with an acquisition value less than $5K will be exempt from physical inventory. • Departments will continue to be held accountable for property below the $5K threshold. • Contact Property Accounting Services for assistance in tracking these items. • Financial Reporting • GL Account and Purchasing Category descriptions have been updated to remove references to old capitalization threshold of $1,000 • Property capitalized prior to July 1, 2011 with a unit value under $5K will be retired and removed from inventory records in FY12.

  7. Contacts • Budget – Katie Martindale • 645-7164 • kmartindale@fsu.edu • Property Inventory – Julie Bickford • 644-9757 • jbickford@admin.fsu.edu • Purchasing – Karen Gibson • 644-9729 • kgibson@admin.fsu.edu • Sponsored Projects – Roberta McManus • 645-2485 • rmcmanus@fsu.edu • Accounting – Donna Jarriel • 644-9429 • djarriel@admin.fsu.edu

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