Number: 
03-150-411
Type: 
Rule
Policy Steward: 
Manager of Analytical Ops
Format Updated: 
University Policy & Standards Converted: 
Status: 
Current
Revision Date: 
Monday, November 1, 2021

* This information replaces FIS 601 Equipment Acquisitions & PRO 201 Equipment Acquisitions & PRO 202 Purchases & PRO 203 Installment Purchases & PRO 204 Capital Leases & PRO 205 Operating Leases & PRO 207 Gifts of Equipment

  

  • FIS 601:  Equipment Acquisitions
    • Effective: 01/01/2003
      Revised: 12/27/2012

       

      Equipment

      Assets valued over $5,000 are capitalized at market value at time of acquisition.  See the PRO Manual for guidance on determining what costs are capitalized and what costs are expensed.  See FIS 1108-01: Invoices for Fixed Assets, for further information on the approvals for fixed equipment invoices.  Equipment that is constructed, or put together at the University is not capitalized until completion and put into service.  Use account code 40199 for purchases of all parts.  Upon completion, journal voucher the total cost to 40101 for capitalization.  Include all necessary information in the Journal Voucher text.  See FIS 406-01: Expenditures - Vendor Invoice Processing for information on handling trade-ins of capital equipment.

      NOTE:  There is one exception to the capital threshold.  All vehicles licensed for road use are capitalized, regardless of the acquisition value.

  •  
  • PRO 201:  Equipment Acquisitions
    • Effective: 03/01/1979
      Revised: 11/01/2021

       

      Individual departments may purchase equipment using state, sponsored, affiliated foundation pass-through, or auxiliary funds. Regardless of the source of funds, all purchases must be made in accordance with applicable federal and state law and Oregon State University (OSU) policies.

      Equipment acquisitions may be made by purchase, loan, gift, transfer, trade, or fabrication. The equipment may be new or used. The acquisition cost must be equal to or greater than (=>) $5,000 per unit/item to be established as capitalized equipment. All other movable equipment of a lesser amount will be accounted for as minor equipment.

      Allowable acquisition costs include any costs related to the obtainment and installation of the equipment such as the purchase price, shipping cost, installation expenses and registration/license fees. Also, all costs related to the importation of equipment from foreign countries (such as entry fee, broker's fee, cartage fee, custom's bond, import service fee and custom duty fees) are allowable as part of the acquisition cost.

      Unallowable costs include extended maintenance, warranties and training.

      Software in the purchase of equipment which is separately itemized on a vendor invoice is not capitalized. This cost is expensed as 20202 "software."

      When determining the best method to acquire equipment, the following considerations should be made:

    • The method chosen should be in the best interest of the University.
    • The method chosen should be the most cost effective.
    • The method chosen does not circumvent normal procurement procedures.
    • Purchase or fabrication of equipment using state, affiliated foundation flow-through, service center, or auxiliary funds.
    • Purchase or fabrication of equipment using federal or non-federal sponsored funds for which the award document states that OSU retains title upon receipt of the equipment.
    • Purchase or fabrication of equipment using federal or non-federal sponsored funds for which equipment title is vested with the sponsor and subsequently transferred to OSU at the completion of the project.
    • Donation of equipment.
    • Lease/purchase of equipment after the lease/purchase option has been exercised. Normally, lease/purchase equipment is treated as university equipment when the first installment payment is made.
    • OSU may acquire the use of equipment, though not ownership, by receiving the following:

    • Government-furnished property (GFP), with title vesting with the government.
    • Loaned equipment, with title remaining with the lender.
    • Purchased or fabricated equipment using federal or non-federal sponsored funds for which equipment title remains vested with the sponsor.
    • See PRO 210 Fabrication for guidance on what constitutes a fabricated or assembled piece of capitalized equipment and specific approval procedures.

      OSU may acquire ownership of equipment in several ways including, but not limited to, the following:

       

  • PRO 202:  Purchases
    • Effective: 03/01/1979
      Revised: 09/10/2020

       

      Equipment purchases using state, local, or sponsored funds must be made in accordance with applicable federal and state law and Oregon State University (OSU) policies.  Equipment purchases over $5,000 must be made following the guidance in the Procurement and Contract Services Manual and the purchasing experts within your designated Business Center.

      Units may purchase equipment out of multiple indexes except in two instances:

    • Equipment purchased by Service Centers must be funded solely by the unit and must be used solely in support of the unit for which it was purchased.
    • Equipment purchased on a grant or contract where the sponsor retains title, either fully or conditionally, must be purchased solely from that grant or contract.
    • Equipment purchased by Auxiliaries must be used solely in support of the unit for which it was purchased. Auxiliaries may fund their capital equipment purchases using auxiliary operating funds, plant funds where the auxiliary is responsible for the loaned and/or bond funds, or through OSUF funds.

      It is extremely important to reflect the proper account code to classify purchases on all requisitions. Please consult your Business Center Accounting Staff for assistance. For sponsored awards, also review GCG 204-02: Cost Classification: Assigning Account Codes and GCG 205: Expenditure Account Codes in the Grant, Contract & Gift Accounting Manual. 

      The requesting department is responsible for determining all factors affecting the installation or use of equipment including, but not limited to:

    • utility availability
    • space requirements
    • floor loading capacity, and
    • building accessibility.
    • Wire Transfers do not create an origination tag in the fixed asset module.  If a payment must be made via wire transfer, use account code 40199 and a journal voucher to redistribute to the appropriate transaction code.

      The Multiple Invoice Function in FIS Banner under FAAINVE does not create an origination tag in the fixed asset module.  If a payment must be made via this process, use account code 40199 and a JV to redistribute to the appropriate transaction code.

      Clearing 40199 Entries - It is important to set up capital equipment in a timely fashion. Any expenses that post to 40199 should be moved to the appropriate accounting data via journal voucher as early as possible to provide the Fixed Asset Team time to establish the asset record in Banner and properly tag the asset as part of OSU’s equipment inventory.

      Beginning in FY19, all 40199 balances should be cleared at a minimum on a quarterly basis. If the equipment is received and not 100% completed, the JV text should state that it is a Work-in-Progress (WIP). Each subsequent quarter a JV should be done to move the “new” 40199 expenses and advise the Fixed Asset Team which Ptag to add the value to and then state whether the asset is completed or still a WIP. If a vendor requires a prepayment before shipping the equipment, the expense could be posted to A5008 Prepaid Equipment Expenses. Once the equipment is received, credit the prepayment and process with the appropriate accounting.

      Before purchasing used equipment, an individual must obtain approval from the department chair, dean, director, or designee. Approval may be given in a memo or as a statement on the requisition.

      Most purchases require equipment to be in an approved capital budget. If the equipment is not budgeted, the supervisor’s or sponsor’s approval may be necessary before purchasing. For equipment purchased with sponsored funds see PRO 902-02: Ordering, Receiving & Tagging.

      CAPITALIZED EQUIPMENT (COSTING $5,000 OR MORE)

      Responsible Party Action
      Department:
      1. Prepare a departmental requisition, obtain necessary approvals, and send the document to buyer within your Business Center using the appropriate operating index and transaction account code:
      • 40101  Equipment
      • 40103  Art/Museum Collections
      • 40104  Vehicles
      • 40201  Vessels
      • 40199  Asset under Construction (should be used for fabricated equipment plus the initial invoice for Service Center and Auxiliary purchases)
      Business Center Purchaser
      1. Ensure document is prepared properly.
      2. As needed, solicit bids or quotes on the item from vendors.
      3. Prepare purchase order in FIS Banner on commodity level accounting.
      Business Center
      1. After unit has acknowledged that the equipment has been received (see PRO 301: Receiving Equipment), process the invoice in FIS Banner.
      2. Include appropriate information in the text field for the asset record.  See PRO-EX1: Creating an Asset Record from a Banner Invoice.
      3. When 40199 is used, a journal voucher (JV) is submitted to move the expense to 40101 or in the case of Service Centers and Auxiliaries to move the expense from the operating index and 40199 to the unit's fund and the appropriate capital asset account code:
      • A8011   Capital Equipment
      • A8012   Vehicles
      • A8015   Vessels
      • A8031   Collections
      • A8032   Works of Art and Historical Treasures
      • A8042   Library Books (General)

      Note (a): The invoice number should be shown as the document reference on the JV. The JV must contain the necessary information to create the asset record. See PRO Ex2: Completing a Journal Voucher and PRO Ex1: Creating an Asset Record from a Banner Invoice.

      Note (b): When an auxiliary is making their capital equipment purchase from an authorized plant fund or a FSxxxx index, the account code 40101 Equipment must be used as the debit entry on the JV and the JV text must include the accurate Fund-Org-Program code for the index where the depreciation should post.

      Fixed Assets Property Management - Business Affairs
      1. Create an asset record from the invoice information and coordinate with department to affix bar code tag to equipment.

      NOTE: See FIS 607: Depreciation for additional information when replacing existing equipment.

      Additional Information

      See the Procurement and Contract Services website for more information on purchasing requirements.

      Automatic-pay vendors submit invoices directly to Business Affairs-Vendor Payment Operations (VPO) within Procurement, Contracts, and Materials Management (PCMM) for payment processing without routing to Business Centers for approval. The expense is then distributed to departmental indexes using journal vouchers. VPO makes every effort not to use auto pays for equipment expenditures. When identified, these invoices are forwarded to Business Center accounting personnel for payment through the regular Banner invoice process.

      To assist in making that identification, the person placing the order should give the vendor the 40101 account code along with the Banner index code to be charged. Business Center accountants should review auto pays as they occur and enter JVs to correct any incorrectly coded purchases.

      Oregon State University VISA procurement cards may not be used for the purchase of equipment or equipment upgrades. See FIS 401-01 Procurement Cards for further instructions.

       

  • PRO 203:  Installment Purchases
    • Effective: 07/01/1996
      Revised: 10/15/2015

       

      Units are permitted to make installment purchases of equipment regardless of the funding source; however, financing a lease is a rare occurrence. Any potential installment purchase must be approved by the Procurement and Contract Services group.

      An installment purchase made with grant funds must have the purchase (payment of installments) completed within the time period of the grant. (If a grant is for 3 years and equipment is purchased on an installment plan in the first month of the grant, then the payment schedule cannot be longer than 36 months.)

      The Installment purchase option should not be used when the ownership of the equipment is Federally Owned (FI or FN) or Other Owned (OI or ON).

      Title to the equipment passes to OSU with the first payment. The first payment is usually coded "equipment," and the item is added to inventory at its full value (total of all principal payments) at the same time. The remaining payments are coded "principal installment payments" and "interest expenses" as appropriate (see PRO-Ex10: Account Codes).

      INSTALLMENT PURCHASES - GENERAL FUND TRANSACTIONS

      Responsible Party Action
      Department
      1. Complete and submit a requisition for the proposed installment purchase of equipment to Procurement & Contract Services.
      Buyer within Business Center with Unit Input
      1. Ensure requisition is properly completed.
      2. Solicit bids or quotes on the item from vendors.
      3. Select vendor and create purchase order.
      4. Notify Fixed Assets Property Management - Financial Accounting & Analysis (FA&A) of approved installment purchase and market value of purchased asset(s).
      Business Center Upon receipt of invoice and equipment, process FIS Banner invoice:
      • Code the initial payment as 40101 to initiate the inventory record, exclusive of any interest.
      • Add text: (1) providing the inventory information for the creation of the asset record, and (2) noting the market value of the purchased asset.
      • Code the subsequent payments as 40113: Installment-Purchase, with the interest portion coded 28810: Interest Expense.
      • Each payment should reference the Ptag or inventory number assigned to the asset, either on the description line or in the text field (e.g., Monthly payment on copier, FA#315062.)

      Note: Fixed Assets Property Management within FA&A will adjust the installment purchase liability for Non-Proprietary Funds.

      Fixed Assets Property Management - Business Affairs
      1. Create asset record from journal voucher information and coordinate with department to affix bar code tag to equipment.

       

      INSTALLMENT PURCHASES - SERVICE CENTERS AND AUXILIARY

      Responsible Party Action
      Department
      1. Complete and submit a requisition for the proposed installment purchase of equipment to Procurement & Contract Services.
      Buyer within Business Center
      1. Ensure requisition is properly completed.
      2. Solicit bids or quotes on the item from vendors.
      3. Send a copy of the signed leased agreement to Fixed Assets Property Management within FA&A.
      4. Initiate purchase order in FIS Banner using operating index and account code 40199 for the asset and 28810 for the interest expense.
      Business Center
      1. Upon receipt of invoice and equipment, process FIS Banner invoice:
      • Simultaneously process a FIS Banner invoice and a FIS Banner Journal Voucher.
      • Process a FIS Banner invoice for initial payment using operating index and account code 40199 for asset portion and 28810 for interest. Then liquidate balance of PO.
      • Process a FIS Banner Journal Voucher to book the asset and the liability incurred:
        • Debit A801X for the full value of the asset,
        • Credit operating index and account code 40199 for portion paid on initial invoice,
        • Credit B2102 for the balance of the principal,
        • Add appropriate text (See PRO-Ex2: Completing a Journal Voucher)

      Example: PO processed for $20,000 asset paid over 24 months with 5% interest. Total PO equals $21,000.

      Initial invoice pays:  
      Index/40199 $833.33
      Index/28810 41.67
      Journal voucher is processed:
      Dr: Fund/A8011 $20,000.00
      Cr: Index/40199 833.33
      Cr: Fund/B2102 19,166.67
      1. Process remaining payments to vendor (to reduce liability) on department fund and account code B2102. Interest expense should be processed against unit's index and account code 28810. Each payment should reference the inventory number assigned to the asset, either on the description line or in the text field (e.g., Monthly payment on copier, FA#315062.)
      Fixed Assets Property Management - Business Affairs
      1. Create asset record from journal voucher information and coordinate with department to affix bar code tag to equipment.

       

    • PRO 204:  Capital Leases
      • Effective: 07/01/1996
        Revised: 03/16/2018

         

        On rare occasions, units may use a Capital Lease Agreement for the purchase of capital equipment. These agreements must be approved by the OSU Procurement and Contract Services Office and install payments will be over a period of five years or less. A capital lease has at least one of the following characteristics:

      • Ownership of the property passes to OSU at the end of the lease.
      • The lease contains a lease/purchase option.
      • The lease lasts for 75 percent or more of the useful life of the equipment.
      • The total of all lease payments (excluding insurance and maintenance costs) is greater than or equal to 90 percent of the fair market value of the equipment.
      • Commodity Lease Intake Form is submitted to and approved by Procurement and Contract Services.
      • Equipment purchased through a capital lease is "conditionally owned-insured" (title code CI) until the final payment is made and the department exercises the option to purchase.

        When the final payment is made, the Business Center notifies Fixed Assets Property Management in Financial Accounting and Analysis. The inventory record is then updated to show "Purchase" rather than "Lease/Purchase" for the acquisition method and the title code is changed to "OSU owned-insured" (SI). If the option to buy is not executed, the asset is returned to the vendor and a Property Disposition Request Form (PDR) must be submitted to remove it from inventory

        If federal funds are involved in the acquisition of equipment on a capital lease, the principal investigator must first determine that the source of funding allows for leasing.

        Responsible Party Action
        Department
        1. Complete and submit a requisition for the proposed capital lease of equipment and a Commodity Lease Intake Form to Procurement & Contract Services.
        Purchasing
        1. Ensure requisition is properly completed.
        2. Solicit bids or quotes on the item from vendors.
        3. Send a copy of the signed capital lease agreement to Fixed Assets Property Management in Financial Accounting and Analysis (FA&A).
        4. Initiate purchase order in FIS Banner.
        Department & Business Center
        1. Department receives equipment and invoice.
        2. Business Center processes FIS Banner invoice:
          1. Code all payment as 40111 Equipment-Capital Lease Payments for the principal amount and 28810 Interest Expense for that year's interest.
          2. Add text: (1) providing the inventory information for the creation of the asset record, and (2) noting the market value of the purchased asset.
          3. Each payment should reference the inventory number or Ptag assigned to the asset, either on the description line or in the text field (e.g., Monthly payment on copier, Ptag# 315062.)
        3. Upon final payment, the Business Center notifies Fixed Assets Property Management in FA&A.
        Fixed Assets Property Management - Business Affairs
        1. When the initial capital lease payment is made, set up the asset in the inventory system using the Fair Market Value or total of principal payments as the asset value/Total Cost. The inventory record should reflect lease purchase and a title code of CI. An asset tag should be created and attached to the equipment at this time.
           
        2. Create a journal voucher (JV) to credit the capitalization fund for the Total Cost of the equipment on B2102 Capital Leases Payable - LT and debit E1001 NIP Change in Fixed Assets.
           
        3. Each year when the principal payment installments are made create a JV to debit B2102 and credit E1001 in the capitalization fund.
           
        4. When the final payment is made update the inventory record to reflect "Purchase" rather than "Lease Purchase" for the acquisition method and change the title code from CI to SI. Note: If the option to buy is not executed, the asset is returned to the vendor and a PDR should be submitted to remove it from inventory.
    •  
    • PRO 205:  Operating Leases
      • Effective: 07/01/1996
        Revised: 11/12/2015

         

        A lease is an agreement for the right to use property for a specific period of time at a specified cost.  Title remains with the lessor.  At no time does the lessee build equity in the property. All lease agreements must be approved by the OSU Procurement and Contract Services Office. The lease agreement should specify whether or not OSU is responsible for insuring the equipment.  OSU assumes no responsibility for leased or rented equipment unless a responsibility is specifically stated in the contract or written agreement. Only then does OSU insure the equipment against theft or damage. Property control, security, and administration of the equipment are the lessor’s responsibility.

        Responsible Party Action
        Department
        1. Draft a lease agreement and forward official document to the Procurement and Contract Services Office for approval and signature.
        2. Submit copy of approved lease agreement to Fixed Assets Property Management, Financial Accounting & Analysis (FA&A).
        3. If lease requires OSU to insure equipment and the asset will be held less than 90 days, a copy of the agreement should be forwarded to OSU Risk Management (item will be covered under supplemental insurance).

          If lease requires OSU to insure equipment and the asset will be held more than 90 days, the asset must be added to inventory.  A copy of the agreement should be forwarded to Fixed Assets Property Management along with a Fixed Asset Data Entry form.  See PRO-Ex3: Fixed Asset Data Entry (FADE) form.

        4. Lease payments are coded "equipment-rentals and leases" (see PRO-Ex10: Account Codes).
        Fixed Assets Property Management
        1. Add leased equipment to the University asset records at its replacement value for tracking and insurance purposes. 
        Department & Business Center
        1. When lease ends and equipment is returned, the Business Center and/or department will submit a Property Disposition Request (PDR) to remove the equipment from inventory.

 

  • PRO 207:  Gifts of Equipment
    • Effective: 07/01/1996
      Revised: 12/14/2015

       

      Any gift or donation acquired by or given to the University must be reported to the OSU Foundation for the purposes of acknowledging the gift and issuing an official OSU gift receipt.

    • Please report all gifts in writing to the OSU Foundation. Include the following information:

    • name, address, and social security number or tax ID number of the donor;
    • fair market value (FMV) of the gift;
    • purpose of the gift;
    • name and title of the staff member in charge of the gift; and
    • a copy of the gift letter and/or any other documents furnished by the donor.
    • The IRS requires that any gifts that are disposed of within three years of receipt have an additional tax form (8282) filed with the IRS; departments are advised to keep gift equipment for at least three years.

      All gifts meeting the equipment definition should be added to inventory immediately.  The true market value of the gift should be ascertained by a formal appraisal at the time of transfer of ownership.

      Antiques, or personal property received from noted alumni, and Assets gifted to the University that may have historic significance to OSU or the State of Oregon should be reviewed for possible inclusion in the Historic Properties register.  Fixed Assets Property Management should be contacted if an item of possible interest is received.

      Booking Gifts as Revenue
      Tangible property (gifts-in-kind) donated to the university must be booked as revenue.  To facilitate the appropriate entries to the General Ledger, the OSU Foundation provides Fixed Assets Property Management, Business Affairs with a monthly listing of all gifts-in-kind (capital and non-capital) received on behalf of OSU.  Fixed Assets will contact individual departments requesting additional information on any item that appears to be a capital asset and will process the journal voucher to book these gifts as required.

      Prohibited Gifts and Gratuities
      University employees shall not accept or solicit, directly or indirectly, anything of economic value as a gift, gratuity, favor, entertainment, or loan that is or may appear to be designed to influence official conduct in any manner, particularly from a person who is seeking to obtain contractual or other business or financial arrangements with the University (e.g., a vendor who has interests that might be affected substantially by the performance or nonperformance of the employee’s duty).

      Such persons include both present and potential suppliers and contractors to the university and agents working on behalf of suppliers and contractors.

      Responsible Party Action
      Department
      1. Receive equipment and letter of acknowledgement (gift letter) from donor.
      2. Submit acknowledgement letter and Gift-in-Kind form to the OSU Foundation for tax acknowledgement.
      3. Submit photocopies of all documentation (gift letter, appraisal, Gift-in-Kind form, etc.) along with a completed Fixed Assets Data Entry form to Fixed Assets Property Management.
      Fixed Assets Property Management
      1. Create asset record in FIS Banner and sends bar code tag to department.

       

      Additional Information

      See the OSU Foundation website for related information on Gifts.