Corresponding Policy: See ‘Acquisition of Capital Assets’ policy.
Corresponding Forms: N/A
Process: Seeking Additional Help on the Accounting for Property that is Considered Owned by PSU

Expenditures for personal property or real property are capitalized if the property is owned or “considered owned” by the university. “Considered owned” refers to capital leases, leasehold improvements and “conditionally owned” assets purchased with grant/contract funds. If PSU does not obtain, or reasonably expect to obtain title to the property, the costs should be expensed and not capitalized.

Property is considered “conditionally owned” if the grant terms provide for title to be transferred to the university at the end of the grant pending receipt of final reports. Conditionally owned assets are “considered owned” and capitalized and depreciated in the Banner Fixed Assets system from date of original purchase or when the asset is placed into service.

If the terms of the grant do not provide for transfer of title, the expenditures for the property are expensed and not capitalized. If the grantor does later transfer title to the university, the university should record the property as an in-kind gift as of the date the title is transferred. Valuation of the asset should be determined based on the fair market value at time of ‘donation’. If fair market value cannot be readily obtained, an acceptable approximation can be made by determining what the net book value of the asset would have been had it been capitalized and depreciated from date of original purchase from the grant/contract fund. Refer to the Personal Property & Real Property Obtained by Gift section in the procedures manual for more information.

Expenditures for property purchased from grant/contract funds for which PSU does not obtain title or reasonably expect to obtain title are to be expensed and not capitalized in the accounting records. The property expenditure may still be recorded in the grant funds using the capital outlay 4xxxx account codes however a corresponding capitalization entry should not be done. This may be achieved by using accounts 40180 ‘Non-State Equipment’ or 40185 ‘ Non-OUS Equipment. The property may be recorded in the Banner Fixed Asset system for inventory and/or insurance purposes as a non-capitalized fixed asset with a non-PSU owned title-to code. (Account codes 40101, 40104 & 40201 automatically create capitalization entries when used in Banner invoices and therefore should not be used for equipment on grants if PSU does not expect to obtain tile.)

Browser not supported