14 FAH-1 H-500
PROPERTY COST ACCOUNTING
14 FAH-1 H-510
CAPITALIZED PROPERTY COST ACCOUNTING
(CT:PPM-25; 04-12-2018)
(Office of Origin: A/LM)
14 FAH-1 H-511 CAPITALIZED PERSONAL PROPERTY
AND GENERAL LEDGER ACCOUNTING
(CT:PPM-19; 10-24-2013)
(Uniform State/USAID)
a. Nonexpendable personal property having an
acquisition cost (as defined in 14 FAM 411.4)
of $25,000 or more per item, and an estimated service life of 2 years or longer
is capitalized property and is recorded on the general ledger. All State motor
vehicles are capitalized, regardless of cost. USAID motor vehicles are
capitalized property only when the cost is $25,000 or greater (to include all
costs associated with outfitting the vehicle in use, including shipping and/or
armoring charges, when applicable). Capitalized property from posts is
recorded on the general ledger and is used to prepare financial statements. Accordingly
(State only), all posts must submit capitalized property data quarterly to the
Office of Global Financial Services (CGFS/F/AO/WCP/PA) in accordance with
instructions provided in cables from the Bureau of the Comptroller and Global
Financial Services (CGFS). USAID missions submit capitalized property data per
instructions issued by USAID/Washington - M/CFO/CAR for mandatory quarterly
submissions.
b. State only: All software
that meets the Departments threshold with expected useful life of 2 years or
longer shall be capitalized. Commercial off-the-shelf software configured for
State operations with a total cost of $500,000 or more is capitalized.
Similarly, State software developed within the agency by direct-hire or
contract employees shall be capitalized if the expected useful life is 2 years
or longer and the cost of direct-hire or contractual services exceeds $500,000.
Software maintenance costs and the cost to convert data are not capitalized and
should not be considered in determining the application of the threshold. Bulk
purchases of software packages with a total cost $100,000 or more shall also be
reported as capitalized.
14 FAH-1 H-512 DEPRECIATION OF
CAPITALIZED PERSONAL PROPERTY
(CT:PPM-8; 11-29-2011)
(Uniform State/USAID)
a. Generally accepted accounting principles require
that the cost of capitalized personal property assets, less any salvage value,
be allocated over the estimated useful life of an asset in a systematic and
rational way. For DPS assets, capitalized personal property depreciation is
computed by the Global Financial Management System (GFMS). For USAID assets,
OE capitalized personal property is depreciated in accordance with ADS Chapter
629.
b. The procedures below are used to depreciate
property.
14 FAH-1 H-512.1 Depreciable Cost
(CT:PPM-8; 11-29-2011)
(Uniform State/USAID)
a. The first step is to determine the depreciable cost
of the item. The depreciable cost is the acquisition cost and all costs
associated with placing the asset in-service less the estimated salvage value
expected to remain at the end of the estimated useful life of the item. For
example, if an item's invoice cost is $30,000, the only related costs were
transportation charges ($1,000), and the estimated salvage or scrap value
remaining at the end of the expected useful life period is $3,000, the
depreciable cost is computed as follows:
Invoice Cost $30,000
Transportation Charges + 1,000
Acquisition Cost $31,000
Estimated Salvage/Scrap Value
3,100
Depreciable Cost $27,900
b. Useful life is generated automatically by approved
property system or Integrated Logistics Management System (ILMS) as applicable.
14 FAH-1 H-512.2 Computing
Depreciation
(CT:PPM-8; 11-29-2011)
(Uniform State/USAID)
In the Global Financial Management System (GFMS),
depreciation is computed and posted to the general ledger quarterly, using
straight-line depreciation (i.e., the incremental reduction of an item's
depreciable cost in equal segments over the years of useful life).
14 FAH-1 H-512.2-1 Annual
Depreciation
(CT:PPM-25; 04-12-2018)
(Uniform State/USAID)
Most nonexpendable property has a definite useful life
span. To arrive at annual depreciation, divide the depreciable cost (e.g.,
$27,900) by the estimated years of useful life. If, for example, the estimated
useful life is 8 years, annual depreciation is $3,487.50 (depreciable cost,
$27,900, divided by 8 years). To arrive at the quarterly depreciation, divide
the annual depreciation by 4. During the first year that an asset is placed
into service, USAID recognizes a half year of depreciation expense, and a half
year of depreciation expense in the final year of an assets estimated useful
life. Using the example above, USAID would recognize $1,743.25 ($3,487.50 X )
of depreciation expense during the first year of service and the final
$1,743.25 in the final year of the assets estimated useful life.
14 FAH-1 H-512.2-2 Accumulated
Depreciation
(CT:PPM-8; 11-29-2011)
(Uniform State/USAID)
To arrive at accumulated depreciation, multiply annual
depreciation by the number of years the item has been in use. If, as in the
example in 14
FAH-1 H-512.2-1, the item has been in use for 3 years, accumulated
depreciation is $10,462.50 (annual depreciation ($3,487.50) multiplied by
number of years in use (3)). USAID would recognize $5,231.25 in accumulated
depreciation expense for the example in 14 FAH-1
H-512.2-1, $1,743.25 for the first year and $3,487.50 for years 2 and 3.
14 FAH-1 H-512.2-3 Net Value
(CT:PPM-8; 11-29-2011)
The net value of the item is arrived at by subtracting the
accumulated depreciation from the acquisition cost. The net value for the item
in the example in 14 FAH-1
H-512.2-1 at the end of 3 years would be $20,537.50 (acquisition cost,
$31,000, less accumulated depreciation, $10,462.50).
14 FAH-1 H-512.3 Capitalized
Property File
(CT:PPM-8; 11-29-2011)
(Uniform State/USAID)
a. Establish a separate file for each capitalized item
at the time that the property is picked up on the property records to maintain
a running account of its depreciating value. The file shall contain the
following information:
(1) Appropriation;
(2) Allotment;
(3) Acquisition cost (use estimated acquisition cost
for items purchased or estimated fair-market value for items transferred or
donated, at the time acquired, if actual cost is unknown);
(4) Asset type;
(5) Description;
(6) Date received (acquisition date);
(7) Estimated future salvage value;
(8) Acquisition costs, including all costs to place
in-service;
(9) Estimated years of useful life;
(10) Date item put into use;
(11) Annual depreciation;
(12) Accumulated depreciation;
(13) Net value; and
(14) Date of disposal, as applicable.
b. Activities not using the
nonexpendable property application (NEPA) shall establish files in the same
format as described below.
Data Field
[1] Appropriation
Enter the appropriation symbol under which the property
was acquired. This will be part of the fiscal data on the acquisition
document. If the property was acquired as a transfer from another post or U.S.
Government agency, it will be necessary to get the appropriation symbol from
the transferor.
[2] Allotment
Enter the allotment symbol as indicated in the fiscal data
on the acquisition document.
[3] Description
Obtain from property records.
[4] Property Number
Obtain from property records.
[5] Category
Select the appropriate category.
[6] Date Received
Use the date of receipt indicated on the receiving report.
[7] Invoice Cost
This is the basic cost of the item, exclusive of any
related costs (e.g., transportation or installation). This cost should be on
the acquisition document.
[8] Other Costs
These are costs other than the basic cost of the item
(e.g., transportation, handling and storage, installation, etc.)
[9] Acquisition Cost
Enter the total of fields [7] and [8].
[10] Salvage/Scrap Value
Enter the estimated scrap or salvage value expected to
remain at the end of the projected useful life period of the item.
[11] Depreciable Cost
Subtract field [10] from field [9] and enter here.
[12] Date Put In Use
Enter the date that the item was put in use. This date
will trigger the depreciation. Depreciation begins with the first fiscal year
after the item is put into use.
[13] Estimated Life-Years
The period during which the item is expected to provide
the service for which it was intended.
[14] Date Disposed of
Enter the date on which the property was discarded.
[15] Date
Enter the date that the entry to the property record is
being made.
[16] Current Period Depreciation
The amount that the property decreased in value each
period (annual depreciation). To arrive at this figure, divide depreciable
cost (field [11]) by the estimated years of useful life
(field [13]).
[17] Accumulated Depreciation
The total amount that the value of the item has decreased
during its time in use. Add the current period depreciation (field [16]) to the previous figure in this field.
[18] Net Value
The current depreciated value of the item. Subtract the
accumulated depreciation (field [16]) from the acquisition cost (field [9]).
[19] Remarks
Enter any appropriate remarks. For example, you may want
to enter a comment on an improvement or modification to the item.
c. For nondepreciable property, only fields [1] through [9], need to be completed
(field [14] should be completed when the property is
discarded). Each year the same value (acquisition cost) is reported on the
annual Report of Capitalized Personal Property. For nondepreciable items, see 14 FAH-1
H-512.4, paragraph c, for nondepreciable capitalized property.
d. The Capitalized Property File may be discarded upon
disposal of the property.
14 FAH-1 H-512.4 Organization of
Capitalized Property Files
(CT:PPM-19; 10-24-2013)
a. Establish the capitalized property records in a
central file. To facilitate compilation of data needed for the annual report,
sort the files by appropriation and, within each appropriation, sort the files
by the following categories:
(1) Communications Equipment;
(2) Vehicles;
(3) Medical Equipment;
(4) Security Equipment;
(5) IT Equipment;
(6) IT Software;
(7) Capitalized Leases of Personal Property;
(8) Other Depreciable Personal Property;
(9) Nondepreciable Capitalized Property, i.e.,
Heritage Assets; and
(10) Reproduction Equipment.
b. Adjustments to capitalized cost:
Later improvements or modifications to a capitalized item also become part of
the capitalization process if they extend the useful life of the asset. Add
the costs of the improvements or modifications to the acquisition cost of the
item and compute a new depreciable cost. Such changes will affect future
depreciation only. Do not modify previously recorded depreciation.
c. Nondepreciable capitalized
property:
(1) Some property items that have an acquisition cost
of $25,000 or more per item and, therefore, are considered to be capitalized
property, will not lose value over the years. Property such as heritage
assets, fine art, antiques, and representational silverware will not have a
defined life span and may increase in value. Although a capitalized property
file is established for each of these items, they are not
included in the depreciation process;
(2) All nondepreciable property (i.e., heritage
assets), regardless of cost, is included as part of the property reporting in
accordance with instructions from the Bureau of the Comptroller and Global
Financial Services (CGFS) and the Bureau of Overseas Buildings Operations
(OBO), in the ILMS system, as applicable. Nondepreciable items are reported at
the acquisition cost shown in the property records. If the value of the item
has been adjusted during the reporting period (e.g., due to a current appraisal),
the adjusted value is reported on the report of nondepreciable property;
(3) Another example of nondepreciable capitalized
property is property in stock. Until capitalized property is issued and
depreciation begins, the property is not depreciated and is reported to the
Bureau of the Comptroller and Global Financial Services (CGFS) for State or to
the financial management office (M/CFO/CAR) for USAID at the acquisition cost.
14 FAH-1 H-513 THROUGH H-519 UNASSIGNED