Version Date: 22 Nov 2007
- Purpose: All capital expenditure must be properly justified. For any type of equipment, the rate of utilization must be validated to ensure cost-effectiveness and necessity of purchasing the unit.
- Coverage: All UA&P employees
- Fixed Assets
- Fixed assets may be acquired through purchase, construction or donation. They must be properly tagged or identified.
- The University has a pool of LCD projector and Camera. Purchase of these Capex for exclusive use of the Unit must be properly justified. And approved by ManCom
- All Capex request must pass through a preliminary review by the Financial Planning Officer (FPO) before it is forwarded to PIS. For computers and computer-related devices, all request must first be endorsed by MIS head, then to Financial Planning Officer. The justification from issued by FPO or MIS head must be properly accomplished
- The following are the criteria on capitalization of assets:
- The amount is P5,000.00 or more (with the exception of Library books);
- The assets is fixed or permanent in nature and is expected to generate benefits that spread over a period of more than one year; and
- The asset is to be used in operations and not intended for sale.
- The three requirements above must be met at all times. Otherwise, the transaction will be charged to expense or credited to donation income as the case may be.
- Fixed assets that decrease in value and efficiency due to wear and tear are subject to depreciation
- The cost of fixed assets includes the original acquisition cost and other incidental expenditures incurred in obtaining and installing the assets. Incidental expenditures include taxes and duties, freight and delivery charges, installation cost and other costs related to the acquisition of the asset. The recording of fixed assets in the books is based on complete supporting documents (i.e., invoice, delivery receipt, receiving report).
- A physical count of all fixed assets is made at least once a year or whenever there is a change of property officer. Results are compared with the Fixed Assets subsidiary ledger. Any difference is immediately verified/explained by the Property Officer and adjustments are made or proper action taken.
- Subsidiary ledgers for fixed assets are reconciled with the General Ledger and is balanced regularly. Subsidiary records contain sufficient information to physically identify specific assets, indicate original cost and reflect accumulated depreciation.
- Property Officer reports to FMR any changes in the status of property (i.e., sale, retirement, transfer or disposal, etc.) to adjust accordingly the accounting records.
- The responsibility to determine the adequacy of insurance coverage for fixed assets is assigned to the Director for Finance (with the advice from an insurance consultant), and should be reviewed periodically.
- Depreciation is computed using the straight-line method based on estimated useful life of the asset.
- Building and Improvements – 5 to 25 years (depending on the type of structure)
- Furniture and Fixtures – 5 years
- Office equipment
- Computer, peripherals and other related equipment such as fax machines, copiers – 3 years
- Air-conditioning units and the like – 5 year
- Library Books and other materials – 3 years
- Transportation equipment – 5 years
- Depreciation rates are reviewed periodically for adequacy in view of excessive use, unforeseen obsolescence, and so on and for excessive provision in the light of experience and new technology. Fully depreciated assets still in use are included in the fixed assets account with appropriate notation to guard against over-depreciation. An estimated salvage value is indicated on all retirement authorizations and followed up to subsequent realization.
- Management is informed regularly of important idle properties and their estimated realizable values.
- Fixed assets can be disposed if they are beyond repair, not functional or replaced by a new technology. At the time of disposal, the book value of the asset is determined and accordingly removed from the books. If these are sold as scrap or second-hand items, the net revenue is taken up as either a gain or loss on sale of fixed assets.