FIACCT 09-03_00 Fixed Assets – Component Units, Modular Furniture & Grouped Assets

Effective: March 16, 1998
Revised: July 2, 2001

Purpose

This policy describes the steps to follow to account for component units, modular furnishings, and grouped assets.

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Policy

Component Units, Modular Furniture, & Grouped Assets shall be capitalized and added to FINET Fixed Assets when appropriate.

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Background

Sometimes it is difficult to determine if component unit assets, modular furnishings, or grouped assets should be recorded as capital expenditures. The difficulty arises in determining whether the individual pieces or the total group of assets qualify as capital assets.

1. An asset group is considered a single asset for capitalization purposes if the items in that group cannot
function independently. If the asset group costs $5,000 or more, and the items in the group cannot function independently, the group is considered a single asset and the total cost should be recorded as a capital outlay expenditure. The asset group should be added to FINET Fixed Assets.

Example: A PC monitor and keyboard cannot function properly without a central processing unit. Therefore, all three components may be considered one asset for capitalization purposes (if the combined cost is $5,000 or more). Expansion boards that may be added also require the other hardware to be functional so they would be part of the capitalized asset (if purchased in the same fiscal year). Conversely, a PC is not dependent upon a printer that may have been purchased as part of the same equipment group. Therefore, the printer is considered a separate asset and would not be capitalized unless it cost $5,000 or more.

2. If individual pieces of a component unit, modular unit, or grouped assets can function independently, then each piece should be considered an asset and would be capitalized only if the individual piece costs $5,000 or more.

a. Modular furnishings, such as “Herman Miller” type desks, shelves, etc., are considered independently
functioning assets and, therefore, are not usually capital assets. Any individual item costing $5,000 or
more would be capitalized. Work area partitions of this type are also not considered fixed assets, regardless of how many may be attached to each other.

b. Groups of assets that may be purchased together or are identical in nature, such as groups of desks, office equipment, etc., are not capitalized unless each item costs $5,000 or more.

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Procedures