Fixed Asset Linkned In

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Fixed Asset Linkned In

  1. 1. xxxxx Fixed Asset Capitalization Limits <ul><li>Capitalization Thresholds </li></ul><ul><li>Costs to purchase property, plant and equipment (PP&E) and Intangibles should generally be capitalized if all the following criteria are met: </li></ul><ul><li>1) The asset's useful economic life is one year or more </li></ul><ul><li>2) The asset is used for production or administrative purposes (items held for </li></ul><ul><li>resale should be classified as inventory and not fixed assets) </li></ul><ul><li>3) </li></ul><ul><li>Specifically for PPE the cost of the item is greater than or equal to the following: </li></ul><ul><li>$2,000 for Machinery and Equipment </li></ul><ul><li>$5,000 for Land, Buildings and Improvements </li></ul><ul><li>$5,000 for Mass Asset Items (similar items purchased as a group) </li></ul><ul><li>Specifically for Intangibles the cost of the item is greater than or equal to the following: </li></ul><ul><li>$2,000 for software licenses </li></ul><ul><li>$500,000 for internally-developed software or enhancements to internally-developed software (see the Accounting for Costs of Computer Software Developed or Obtained for Internal Use policy) </li></ul><ul><li>$2,000 for other intangible assets </li></ul>* The information above is taken directly out of xxxxx Fixed Asset Policies on Depreciation & Amortization methods for PPE and Intangible assets dated
  2. 2. xxxxx Fixed Asset Depreciation Method & Useful Life Definitions Depreciation Depreciation methods and lives to be used are as follows: Useful Life Asset (Years) Class Depreciation Method Land Improvements 20 110 Straight-line Building 40 120 150% Declining Balance Building Improvements 20 130 Straight-line Leasehold Improvements 20 135 Straight-line Office Equipment 8 140 Sum-of-the-Years' Digits Cafeteria Equipment 8 150 Sum-of-the-Years' Digits Data Handling Equipment 8 170 Sum-of-the-Years' Digits Machinery Equipment 8 180 Sum-of-the-Years’ Digits Vehicles 5 200 Sum-of-the-Years' Digits Specialized Printing Equip (platesetters, RIPs, etc.) 5 190 Sum-of-the-Years’ Digits Info Systems-Personal Computers 3 160 Sum-of-the-Years’ Digits Info Systems-Other Equipment 5 165 Sum-of-the-Years’ Digits * The information above is taken directly out of the Capitalization Thresholds and Depreciation Methods Policy dated 12/19/2003.
  3. 3. Fixed Asset Transfers and Retirements Authorization * The information above is taken directly out of the Retirements, Transfers, and Changes Policy dated 11/16/2004. Approval Process Authorized individuals of the company must approve all fixed asset retirements, transfers or other changes for the following dollar thresholds based on the asset’s net book value: Retirements: < $10,000 Finance contact person $10,001 - $499,999 Business Unit Controller > $500,000 Corporate Controller Transfers/Other Changes: < $50,000 Finance contact person $50,001 - $499,999 Business Unit Controller > $500,000 Corporate Controller This approval process will take place in the ZFORMS platform of SAP.
  4. 4. Overview of Fixed Asset Life Cycle Expense Capitalize + Gross Asset - Accumulated Depreciate Invoice Transfer Retire = Net Book Value Project System (AUC/D) Fixed Asset System A d d i t i o n s
  5. 5. Fixed Asset Systems Processes Matrix
  6. 6. Commonly Used SAP Transaction Screens * Recommended
  7. 7. Fixed Asset Reporting
  8. 8. Fixed Asset Quarterly Processes
  9. 9. Asset Tag Process * Recommended Roles and Responsibilities
  10. 10. Asset Listing Process * Recommended Roles and Responsibilities
  11. 11. Plant Closing Process Overview Physical Process Review <ul><li>Locate </li></ul><ul><li>Identify </li></ul><ul><li>Count </li></ul><ul><li>Record </li></ul><ul><li>Process in SAP </li></ul><ul><li>Coordinate Physical Movement </li></ul><ul><li>Manage Proceeds </li></ul><ul><li>Review to Ensure Accuracy </li></ul>Plant Closing Retirement with Proceeds Retirement without Proceeds Gain or Loss Fully Depreciated or Write Off
  12. 12. Plant Closing Roles and Responsibilities Mgmt decision to Xfer, Sell, Retire, WriteOff Asset(s) Prepare SAP Asset Listing Conduct Physical Finance Sign Off Physical Movement System Processing (Zforms) Role: Responsibility: <ul><li>Facilities Management </li></ul><ul><li>Fixed Asset Accountant </li></ul><ul><li>Plant Manager (shipping Location) </li></ul><ul><li>General Accounting Manager </li></ul><ul><li>Plant Manager (shipping and receiving location) </li></ul><ul><li>Business Analyst </li></ul><ul><li>Communication </li></ul><ul><li>Process Oversight to Completion </li></ul><ul><li>Set Timing Expectations </li></ul><ul><li>Ensures cash (if applicable) is forwarded to treasury </li></ul><ul><li>Preparation and distribution of Current SAP Fixed Asset List to Plant Mgr </li></ul><ul><li>Support and assistance as needed </li></ul><ul><li>Coordination of Fixed Asset Physical Inventory </li></ul><ul><li>Ensure accuracy, completeness and timeliness of Physical </li></ul><ul><li>Define and group assets as Xfer, Sale, Sale with Proceeds, Retire, or Write-off </li></ul><ul><li>Approves Final SAP Fixed Asset Listing prior to physical movement of assets </li></ul><ul><li>Communicates Approval </li></ul><ul><li>Plant Manager of sending facility ensures shipped assets match Fixed Asset Listing </li></ul><ul><li>Receiving Plant Manager ensures assets received match Fixed Asset Listing </li></ul><ul><li>Processes Fixed Asset movement in ZForms using appropriate activity codes </li></ul><ul><li>Communication of completed ZForms </li></ul>
  13. 13. Fixed Asset Terms <ul><li>Acquisition - To add a physical or Intangible asset to the SAP Project System. </li></ul><ul><li>Capitalize - To spread the cost of an asset acquisition over the assets estimated useful life. </li></ul><ul><li>Expense - To incur the entire cost of an asset in one month on the P&L. </li></ul><ul><li>Depreciate – To incur an expense for Plant Property or Equipment impacting the P&L and Balance sheet over the useful life of the asset. </li></ul><ul><li>Amortize – To incur an expense for an Intangible asset impacting the P&L and Balance sheet over the useful life of the asset. </li></ul><ul><li>AUC Balance – The point in time total value of project invoices that have not yet been capitalized. </li></ul><ul><li>AUC Addition - To create an asset. The value of projects that have been capitalized. Depreciation or Amortization begins at this time. </li></ul><ul><li>Transfer – Physical and Systematic movement of fixed assets from one plant or cost center to another. There may be times when the transfer is only systematic (i.e. a cost center change). </li></ul><ul><li>NBV – The acquisition cost of an asset less its accumulated depreciation. </li></ul><ul><li>Retirement (with No Proceeds) – To take a physical or intangible fixed asset off the SAP system. Also called “Writing Off” an asset. </li></ul><ul><li>Retire (Sell with Direct Proceeds) – To take any physical or intangible asset fixed off the SAP system in exchange for payment. If payment > NBV then a gain on asset is recognized, if payment < NBV then a loss is realized. </li></ul><ul><li>Retire (Sell with Indirect Proceeds) - To take any physical or intangible asset fixed off the SAP system as part of a larger payment (for example furniture maybe included in the sale price of the building). </li></ul>

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