Fixed Asset Justification

Two GL Accounts that reflect a fixed asset:

  • 740000 Equipment and Machinery (Example: centrifuge, laser, tractor, computer, vehicle)
  • 750000 Furniture and Furnishings (Example: desk, chair, bookcase, deskunitN
  • Note: Having the correct GL/Account assigned correctly at the requisition point helps streamline the entire ordering process. 

Fixed Asset dollar amount:

A fixed asset is any Please note: Having the correct GL/Account assigned correctly at the requisition point helps streamline the entire ordering process. one item (or a system) with a purchase price of over $5,000 and a useful life of two or more years. This means the asset status is effective if the item (including all costs pertaining to its start up) is $5,000.01 and up.

Purchase Price: This is the price that is included on one (1) purchase order

Example:

  • Piece of Equipment ($4,500)
  • Software ($400)
  • Shipping ($150)
  • Total cost to get the item here and operation is $5,050, therefore, it is a fixed asset
  • Note: If the $400 software had been purchased on a separate PO, this item would not be a fixed asset

Internal Items:

If an item is an add-on, internal, or software, and not purchased at the time of the original piece of equipment or system, it is not a fixed asset.

If it cannot stand alone to work, it is not a fixed asset.

If the add-ons, internal and/or software must be present to make the equipment in question work, it is a part of the fixed asset.

General Rule to Remember:

A fixed asset is a piece of equipment or furniture that can be used as a stand-alone item.

Example:

  • Servers that are purchased with a price over $5,000
  • A computer system that is purchased on one (1) PO that is over $5,000
    • Computer $4,600 + monitor $500 =$5,100
    • Total cost of this system is $5,100therefore, it is a fixed asset.
    • Had the monitor not been purchased, this would not be a fixed asset.
  • A system that consists of several pieces that make up one main item (this often involves the sciences and their equipment)
    • Detection system $4,000 + scanners 3 at $300 each = $900 = Installation/training $200 + freight $50
    • Total cost for this system is $5,150therefore, it is a fixed asset

Note: When a "system" is purchased, the main piece of the system is considered the main fixed asset and is assigned a fixed asset number. This is the piece of equipment that the serial number references. All accessories and components are considered sub-assets and are associated with the main asset.