Property Management Policy & Procedure Manual
Section 200: Equipment Acquisition
Effective: 07/01/1996
Revised: 12/22/2015


Units are permitted to trade all or part of an asset to reduce the cost of a new asset.  All trades require prior approval from Surplus Property and must be fully documented in FIS Banner.  Items acquired by trade are capitalized at their full value, not the amount after it was reduced by a trade-in allowance.  Please see PRO 803: Trade-in of Equipment for additional information on trade transactions.

Exchange of an older piece of equipment for a reduction in cost on a new asset.

Responsible Party Action
  1. Contact Surplus Property to request approval for the proposed trade.
  2. Submit to Purchasing within the appropriate Business Center:
    1. A Departmental Requisition and vendor quote of the item to be obtained.
    2. A Property Disposition Request (PDR) form containing the following:
    • The asset(s) to be traded.
    • Note under ‘resale price’ the credit that is to be received from the vendor for the traded asset(s).
    • A description of the item to be received for the traded item.
    • Signature from Surplus Property for the approval of the trade-in.

Note: If multiple assets are being traded there must be a specific amount for each asset – not a lump sum for all.

  1. Set up the Purchase Order in FIS Banner to reflect the full value of the new asset (including, rather than less than, the value of the trade-in credit). There should be a text notation on the Purchase Order regarding the amount of credit to be received from the vendor.
  2. Purchasing will provide a copy of the PO, as well as, the original PDR to Fixed Assets Property Management within Financial Accounting & Analysis (FA&A) to keep on file until the asset is received and payment processed.
Business Center
  1. Process the invoice for the new asset for the full amount of the asset (including trade-in credit) even though the invoice from the vendor will probably be reduced by the value of the trade-in allowance.  In order to pay the correct amount, a credit memo must be created in Banner for the amount of the trade-in allowance.  Be sure to process the invoice and credit memo simultaneously (cross-referencing the document numbers in the text field of both). This allows the proper payment to the vendor.
  2. Set up the credit memo for the amount of the trade-in and posted to fund 095880 Asset-Undistributed Income Clearing and Account Code B5801 Undistributed Income.
Fixed Assets Property Management
  1. Create the new asset record from the Origination tag created by the invoice. The disposition of the traded asset will be processed in the Fixed Asset module under the ‘sale of asset’ function. This function will take the ‘proceeds’ of the sale (the credit amount in the undistributed clearing account from the credit memo) and return it to the appropriate departmental fund (same index as the invoice). This process allows the proper recording of the gain or loss on the disposal of the traded-in asset. Gain or loss will only be posted to 09xxxx Service Center and 1xxxxx Auxiliary funds.
Exception: If the traded item is not a capital asset, this process cannot be used as there is no way to return the proceeds (credit) to the unit through the ‘sale of asset’ function. In this case, the credit memo should reflect the same index as the invoice and use account code 06981 Sale or Trade-In of Assets to reduce the payment to the vendor. The new asset will be recorded on inventory at full value.


One-to-One swap of equipment with no dollars changing hands.

Responsible Party Action
  1. Request permission from Fixed Assets Property Management to trade an asset.
  2. Obtain the current market value of the asset being received.  (May require services of a certified appraiser.)
  3. Use current market value as its inventory value, if it meets the capital threshold.
  4. A letter documenting and justifying the swap should be sent to Fixed Assets Property Management with a PDR form to remove the traded asset from inventory and a Fixed Asset Data Entry (FADE) form with information to add the received asset to inventory.