Library General Collections
- Chad
Corresponding Policy: See ‘Fixed Asset Library Accounting-Intro’ policy.
Corresponding Forms: N/A
Process: Seeking Help on the Accounting for General Library Collections
(Library adjustments are to be performed annually after June depreciation is posted and before July depreciation is executed. After all fixed asset adjustments for the fiscal year are performed, a final depreciation run is to be executed using a June depreciation date and posted to period 14 to account for year-end additions.)
Additions
Although the unit price of a typical general collection volume is less than the PSU capitalization threshold, the total cost of the entire general collection far exceeds the threshold. Therefore, all additions to library general collections are capitalized regardless of amount and depreciated over ten years in the Net Investment In Plant fund 890000. For practical purposes, Banner Fixed Assets is not to be used to separately track the acquisition, depreciation, and disposal of each library book. Instead, Banner Fixed Assets has one fixed asset record for each year's acquisitions for the general collection. (For the GASB 35 conversion, effective June 30, 2001, eleven asset records were established for the general collection: FY1991 and earlier, FY1992, FY1993, FY1994, FY1995, FY1996, FY1997, FY1998, FY1999, FY2000, and FY2001.) The sum of the general library asset records' adjusted cost is to reflect the total historical cost of the general library collection on hand (net of withdrawals) at the end of a fiscal year. The sum of the general library asset records' accumulated depreciation is to reflect the total accumulated depreciation of the general collection on hand (net of withdrawals) at the end of the fiscal year.
At the end of each fiscal year, a new general collection record is to be added to the Banner Fixed Assets system using the 'New Tag, Non-Procurement' action type and asset type NL 'NonExp-Library Books and Periodicals' in the Fixed Asset Master Maintenance form (FFAMAST) reflecting the fiscal year's acquisitions. The value of the additions is to be obtained from the 'General Collection Historical Cost' section of the 'Annual Library Valuation Report' and includes values for expenditures recorded using account code 40190 'Library Purchases' (across fund types) as well as FMV of in-kind gifts.
The new library record is then to be capitalized on the General Ledger to the fiscal year just ending, using the Banner Fixed Assets 'Ptag capitalization' (SCAP) function of the Fixed Asset Adjustment form (FFAADJF). The resulting capitalization entry debits the asset account A8042 'Library Books (General)' and credits the equity account E1001 'NIP Change in Fixed Assets'.
After the capitalization is performed, the depreciation information is then to be established for the record using the Banner Fixed Assets Fixed Asset Depreciation form (FFADEPR). The depreciation method should be straight-line, the salvage value should equal zero and the useful life set to ten years. The depreciation start date is to be set to January first of the fiscal year being reported on the valuation report. Therefore when depreciation is run at the end of the fiscal year, 6 months of depreciation is calculated and posted to period 14 thus resulting in a half year first year depreciation option. For example, if there are additions in Fiscal year 13, a new record is created in July using a January 1, 2013 depreciation start date. - (With the exception of disposals/withdrawals, after 10 years from the depreciation start date, the total accumulated depreciation of a general collection record will agree to the total cost of the volumes acquired 10 years earlier, leaving a zero net book value.)
Revenue Recognition of Donations
Revenue is to be recognized for library general collection donations received during the fiscal year and is to be recorded against the Net Investment In Plant fund 890000. A journal entry is to be recorded at fiscal year end after the associated capitalization has occurred. The journal entry should credit the appropriate revenue account in the 036xx account series and debit the equity account E1001 'NIP Change In Fixed Assets' in fund 890000. (The debit to the equity account offsets the donation portion of the equity credit that occurs during the capitalization of additions.)
Deductions
Volumes are removed from the general collection periodically based on institutional library policy. Volumes that are withdrawn during the fiscal year are to be aged and valued at their historical cost, associated accumulated depreciation is to be determined, and the total general collection values adjusted accordingly at the end of the fiscal year. Accounting treatment for withdrawals of fully depreciated and partially depreciated deductions is essentially the same however the required Banner Fixed Assets maintenance differ slightly:
Deductions of Fully Depreciated Withdrawals
Institutional library withdrawal policy generally indicates that the age of withdrawn volumes exceed ten years. Therefore withdrawals are usually related to volumes that are fully depreciated. For fully depreciated withdrawals, the Banner Fixed Assets subsidiary record values and the General Ledger values must be reduced by the historical cost of the volumes withdrawn. This is achieved by use of the Banner Fixed Assets GL Change-Cap Amount/Account (GLCE) function (sometimes in conjunction with the Write Off (WOFF) function) of the Fixed Asset Adjustment form (FFAADJF). For example, if in a fiscal year, the library had general collection withdrawals of $200,000, the year-end accounting entry would be to reduce both the fixed asset adjusted cost and accumulated depreciation of the oldest library record by $200,000 using a Fixed Asset GLCE adjustment. This presumes that the oldest library record still contains greater than $200,000 in asset cost and accumulated depreciation. If not, the oldest tag should be disposed of using the fixed asset Write Off (WOFF) function adjustment and the residual amount of the entry would be made to the next oldest record using the GLCE function, etc. until the total amount of the withdrawals have been applied.
Deductions of Partially Depreciated Withdrawals
In some instances, PSU might identify disposals that are less than ten years old based on original year of acquisition. Recording of disposals of volumes that are not fully depreciated (less than ten years old) are to be accounted for in the same manner as withdrawals of fully depreciated volumes with the exception that the fixed asset GLCE adjustment be performed against the corresponding fiscal year's library record. The total adjusted cost is to be reduced by the historical cost of the volumes withdrawn and the accumulated depreciation is to be reduced by the amount of accumulated depreciation associated with the withdrawn items. For example, if in FY2013, the university disposes of $100,000 of library books that were originally acquired in FY2008, the Banner Fixed Assets GLCE adjustment would be processed against the FY2008 record reducing the total adjusted cost by $100,000 and accumulated depreciation by $55,000 (Historical Cost/useful life X age, $100,000/10 X 5.5 (Jan 01, 2008 - Jun 30, 2013)).
Insurance, Replacement Values
Insurance and replacement values are to be adjusted annually based on the 'General Collection Replacement Cost' section of the 'Annual Library Valuation Report'. The replacement values are established each year by the Inter-Institutional Library Council. These values are to be adjusted at fiscal year-end only after the FWRFAAX 'Fixed Assets - Inflation Factor' program has run and after all other library general collection adjustments have been performed.
The insurance and replacement values of each library general collection fixed asset tag is to be set to the prorated value of the total general collection replacement cost per the annual library valuation report. The proration is to be based on total adjusted cost of all the general collection records. The update is performed via the Banner Fixed Assets 'Permanent Tag - Update Asset' action in the Fixed Asset Master maintenance form (FFAMAST). For example, if in FY '13 the total general collection replacement cost per the annual valuation report is $10,000,000 and the sum of the total adjusted cost of all library general collection records is $8,000,000, the insurance and replacement values of each individual general collection record should be set to 125% of the individual records adjusted cost. The formula is: individual record's insurance & replacement cost = (individual records adjusted cost / sum of all general collection record's adjusted cost) X total replacement cost. Restated it is: Individual record's insurance & replacement cost = individual records adjusted cost X (total replacement cost / sum of all general collection record's adjusted cost). In the example, individual records adjusted cost X ($10,000,000 / $8,000,000) or 1.25 or 125% of the individual records adjusted cost.