Accounting for UVM's fixed assets is performed by Financial & Cost Accounting Services within University Financial Services. The University of Vermont's fixed assets are recorded at cost or, in the case of gifts, at the fair value at the date of donation, in the Capital Assets (Fund 50X) section of the University's general ledger. The net interest earnings on unspent bond proceeds, or, interest expense, is capitalized for debt-funded construction projects and added to the appropriate capital asset(s).
The University has two major classifications of fixed assets:
- Real Property, including land, buildings, infrastructure and land improvements
- Institutional Personal Property, including movable equipment and software systems
Definitions
- Assets
- Items of ownership convertible into cash, as cash, notes and accounts receivable, securities, inventories, goodwill, fixtures, equipment, or real estate
- Building Interiors
- General interior renovations/improvements
- Building Service Systems
- Service systems such as plumbing, heating, ventilation, air conditioning, electrical, fire protection and safety, and elevators
- Capital Movable Equipment
- An article of non-expendable, tangible, personal property which stands alone, is complete in itself, does not lose its identity, has a useful life of more than one year, and has a value of $100,000 or more.
- Capital Projects
- Those projects that add to the fixed assets of the University or increase the useful life of a fixed asset
- Fair Market Value
- Cost at acquisition in an arm’s length transaction, or at appraised value for gifts
- Fixed Equipment
- Permanently attached fixtures, machinery, and other appurtenances that cannot be removed without cutting into walls, ceilings, or floors or otherwise damaging the building
- Infrastructure
- Long-lived capital assets that normally can be preserved for a significantly greater number of years than most capital assets and that normally are stationary in nature
- Institutional Personal Property
- Moveable Equipment, Software Systems, Fine Arts, Library Collections, and Livestock
- Land Improvements
- Betterments, other than buildings, that ready land for its intended use
- Movable Equipment
- Tangible, non-expendable, personal property that has an anticipated useful life of one year or more with an acquisition cost of $5,000 or more
- Real Property
- Land, Buildings, Infrastructure and Land Improvements
- Software Systems
- Purchased, or University developed, software including all implementation costs
Depreciation
Depreciation is calculated using the straight-line method over the estimated economic useful lives of the related assets, as follows:
- Building (basic construction components/shell) = 40 years
- Building service systems (plumbing, electrical, etc.) = 25 years
- Building interiors/renovations = 20 years
- Infrastructure and Land Improvements = 20 years
- Fixed equipment = 15 years
- Software systems = 7 years
- Movable Equipment = 5 years
Major construction projects are capitalized, but are not depreciated until they are put into service.
Gifts
Gifts of fixed assets are valued and recorded in the following manner:
- Land and Buildings acquired by gift or bequest are recorded at fair market value at the date of acquisition. The fair market value is assigned as the result of satisfactory independent appraisal contracted for and reviewed by Campus Planning, unless an independent appraisal completed within twelve months preceding the date of acquisition is available for review and approval by Campus Planning. Land and buildings donated as gifts to the endowment or other funds is recorded as investments and sold expeditiously for cash.
- Movable equipment with a fair market value equal to or greater then $100,000 will be capitalized. Gifts of movable equipment less than $100,000 are recorded as gifts-in-kind and expensed.
- Gifts of fixed assets that are not intended to be used in operations are recorded as investments.
Disposal
Proceeds from sale, salvage, insurance, or other amounts received that result from the disposal of fixed assets are first applied to any outstanding liabilities against those assets. Gains or losses from the sale of fixed assets are added to or subtracted from the Chart of Account fund that originally acquired the fixed asset.
When a fixed asset is disposed of (e.g., a building is demolished), its book value and accumulated depreciation are removed from the University’s accounts and may result in a non-operating loss.
The University fixed assets database (Peoplesoft Asset Managment module) is updated to reflect the disposal.
Building Componentization Study
The objective of a componentization study is to perform a comprehensive Building Component and Fixed Equipment analysis of the capitalized project cost for designated buildings, and, in accordance with the Uniform Guidance for federal awards, allocate the cost by project and year capitalized to the primary components and subcomponents of the Building Construction, Building Service Systems, and contractor installed Fixed Equipment.
An annual building componentization study is typically performed on UVM buildings used for research, and their respective capital value is classified into the appropriate building component. University buildings that do not have a componentization study performed on them are depreciated over a useful life of either 40 years for buildings or 15 years for fixed equipment.