University of Nebraska Kearney

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Accounts Payable Policies:  Property/Equipment Expenses

Capitalization Policy. (See also Determining Costs.)

General Ledger (GL) Account Coding.  Although there are many capital equipment GL Account codes available, most capital property and equipment with an acquisition value of $5,000 or more may be classified using the following accounts:

553100 Office Equipment   
553270 Educational and Recreational
Equipment 
 
553300 Automotive Equipment  Purchase of passenger car (including station wagons, passenger vans and light trucks).
553350 Ag/Const/Shop Equipment   
553500 Computing Equipment  Purchase of electronic data processing equipment, including central processing units, peripheral equipment & terminals.
553600 Household & Dorm Equipment  Purchase of food service, janitorial, and household & institutional equipment and furniture.
553700 Other Personal Property  Equipment that does not fit another category listed herein.
553800 Research Equipment  Purchase of medical equipment having a service life of more than one year.

Lease/Rental Expenses.
 

Documentation. 
Included with the documentation for the first rent payment should be a copy of the rental agreement detailing the terms of that agreement.  Each time there is a change in a rental agreement or a renewal negotiated, a copy of the agreement should be forwarded to Accounts Payable.

Major Equipment.  Some agreements for the lease of major equipment (equipment value = $5,000 or more) actually constitute an installment purchase of that equipment called a "capital lease."  Copies of all new lease agreements for major equipment should be forwarded to Accounts Payable so that a determination may be made whether to treat the acquisition as capital outlay, which must be added to the fixed asset inventory and the acquisition value depreciated over the life of the equipment.