Property Management Policy & Procedure Manual
Section 200: Equipment Acquisition
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.