ADMINISTRATIVE PROCEDURE

Capital Equipment Disposals: Selling Capital Equipment Purchased with Sponsored Funds (does not include NSF Grants, NIH Grants and Non-Federal Grants)

The accounting for the sale of an asset purchased with sponsored funds depends upon the sponsor that awarded the funds.

Capital equipment purchased with NSF Grants, NIH Grants or Non-Federal Grants; refer to capital equipment procedure: Capital Equipment Disposals: Purchased with Sponsored funds from NSF Grants, NIH Grants or Non-Federal Grants

Selling Capital Equipment Assets that were purchased with Sponsored Funds

Departments can sell capital equipment assets that were purchased with sponsored funds; however only when the capital equipment is no longer needed for the original project or program. Prior to selling, the department must use the equipment in connection with other federally-sponsored activities, in the following order of priority: (1) Activities sponsored by the Federal awarding agency which funded the original project, then (2) activities sponsored by other Federal awarding agencies. If such activities don’t exist, the department can sell the capital equipment.

The University must have title to the asset before it can be sold.

To initiate the disposal the Department must:
  1. Determine the net book value (NBV) by using the existing asset management reports in UMReports or by a query in the PeopleSoft Asset management module.
    • For assistance in determining the NBV or ownership, please contact Inventory Services at controller@umn.edu.
  2. The asset should be sold at Fair Market Value (FMV).
    • Determine FMV by obtaining an official appraisal from three different sources (e.g. EBAY, Vendor, etc.) in writing (print screen is acceptable).
    • Determine if sales tax should be added to the sale price.
      • The sales tax rate should be from the county where the item resides.
  1. Complete form UM 1393: Capital Equipment Asset Disposal form from the UWide Forms Library.
  2. Forward the form to Inventory Services at controller@umn.edu.
    • Dean, department head, or administrator's signature is required on this form. Approval authorization can be delegated based on the President's Delegations of Authority Program:  FN02 - External sales of good and services.
  3. Inventory Services will review the form to ensure the University has title to the asset.
  4. If Inventory Services authorizes the disposal, an approved copy will be sent back to the submitting department.
    • The disposal cannot occur if it has not been approved by Inventory Services.
  5. When the approved copy is received by the department, the property may be sold to the buyer.
    • The UM asset tag should be removed before the item leaves the University premises.
  6. The Department must create an invoice to the buyer for the amount of the sale, if the transfer of cash does not occur immediately at the point of sale.
  7. The buyer should pay the department with a check made out to "University of Minnesota."
  8. The buyer must sign a receipt for the property. The receipt must be retained by the department according to the Managing University Records and Information policy, along with the approved Capital Equipment Asset Disposal form.
  9. Inventory Services will make the appropriate adjustments in the PeopleSoft Asset Management module.

Accounting for the transaction:

All sales must follow Steps 1-10 above.  Once those have been completed, the department must complete the following:

All Federal Agencies and NSF/NIH Contracts & Cooperative Agreements:

Note: Does not include NSF grants, NIH grants or Non-Federal grants.  Refer to procedure: Capital Equipment Disposals:  Selling Capital Equipment Purchased with Sponsored Funds from NSF Grants, NIH Grants, or Non-Federal Grants.

Project is Active and:

Fair Market Value (FMV) is $5,000 or less:

The check should be deposited into a non-sponsored departmental chartstring using the Accounts Receivable University policy: Accepting and Depositing University Revenue.  The deposit must be coded to:

  1. Select CA reference code
  2. Fund 1000
  3. DeptID
  4. Program
  5. Account 850103 - Capital Equipment Sale Proceeds

Note: If a non-sponsored chartstring receives the revenue from the sale of an asset; at the time of deposit the CA reference code and account 850103 - Capital Equipment Sale Proceeds are selected.

Note: If the sale of the asset is split between sponsored and non-sponsored, the reference code of RD should be selected and the proper account entered. Do not use the SP or the CA reference codes.

Fair Market Value (FMV) is $5,000 or greater:
  1. The check should be deposited to the project used to purchase the equipment using Accounts Receivable Administrative Policy: Accepting and Depositing University Revenue. The deposit must be coded to:
    • Select SP reference code (PeopleSoft will use Account 220205 Program Income)
    • Fund 3xxx
    • Project DeptID
    • Project Number
    • Account 220205 - Sponsored Program Income Unapplied Cash

Note: If the sale of the asset is split between sponsored & non-sponsored, the reference code of RD should be selected and the proper account entered. Do not use the SP or the CA reference codes.

  1. Notify SFR of the deposit

SFR will process the transaction to return the funds to the sponsor.

Project is Complete or Inactive and

Fair Market Value (FMV) is $5,000 or less:

  1. The check should be deposited into a non-sponsored departmental chartstring using the Accounts Receivable University policy: Accepting and Depositing University Revenue. The deposit must be coded to:
    • Select CA reference code
    • Fund 1000
    • DeptID
    • Program
    • Account 850103 - Capital Equipment Sale Proceeds

Note: If a non-sponsored chartstring receives the revenue from the sale of an asset; at the time of deposit the CA reference code and account 850103 – Capital Equipment Sale Proceeds are selected.

Note: If the sale of the asset is split between sponsored and non-sponsored, the reference code of RD should be selected and the proper account entered. Do not use the SP or the CA reference codes.

Fair Market Value (FMV) is greater than $5,000:

  1. The check should be deposited to the project used to purchase the equipment using the Accounts Receivable University policy: Accepting and Depositing University Revenue. The deposit must be coded to:
    • Select RD reference code
    • Fund 3xxx
    • Project DeptID
    • Program
    • Account 850103 – Capital Equipment Sale Proceeds

Note: If a non-sponsored chartstring receives the revenue from the sale of an asset; at the time of deposit the CA reference code and account 850103 – Capital Equipment Sale Proceeds are selected.

Note: If the sale of the asset is split between sponsored and non-sponsored, the reference code of RD should be selected and the proper account entered. Do not use the SP or the CA reference codes.

  1. Notify SFR of the deposit

SFR will process the transaction to return the funds to the sponsor.

Disposals other than Selling Capital Equipment Assets

Departments can dispose of capital equipment assets that were purchased with non-sponsored or sponsored funds; however the accounting for the transaction is dependent on the source of the funds, status of the project and the type of disposal. The University must have title to the asset before it can be disposed. Inventory Services can verify the University has title to the equipment. Contact Inventory Services at controller@umn.edu for assistance in determining ownership.

Vehicle Sales

If a department wishes to sell a vehicle for which Fleet Services holds title:

  • They must contact Director, Fleet Services 612-625-8020 to assist with the title transfer
  • If selling a vehicle (any car, truck, trailer, or licensed vehicle, except boats), an auction sale may be coordinated through Fleet Services, or a department may negotiate a sale.

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