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Process Group/Policy Details
Subject: Asset Management
Process Group: Asset Management
Title of Policy: AM Disposition
Effective Date: 05/2014
Approved/Revision Date: 05/2014
Approved by:
Process Group Definitions
Disposition – Disposition of a fixed asset is the last part of the assets life cycle, and results from a fixed asset being destroyed, surplused, transferred, sold, traded in, lost, vandalized or worn-out and no longer in service.
Net Book Value – Original cost minus accumulated depreciation
Gain/Loss on disposal – Occur when the net book value of the asset does not equal the cash or other consideration received when the asset is disposed of.
Departments shall complete a disposal form from Surplus Property for surplused items.
Policy Statement:
Departments shall use Asset Management to record and manage fixed assets throughout the assets useful life, unless an exception is approved by the Office of the State Controller. Disposition is the last step in the life cycle of a fixed asset.
To dispose of a Fixed asset, departments shall prepare a Fixed Asset Disposition Transaction (FD).
Under full accrual accounting required for the state government-wide financial statements, departments shall recognized a gain or loss on the sale or disposal of fixed assets.
Procedures:
AM.PR.05.1 – Sale to outside Entities or Surplus
When disposing of a Fixed Asset, an FD transaction is used and must reference the Asset ID so that all asset information is inferred.
Core will calculate depreciation expense up to the disposal date on the FD transaction.
For sales of fixed assets in proprietary funds, departments will prepare a Cash Receipt (CR) transaction. The CR recognizes cash and revenue.
AM.PR.05.2 – Disposition with a Trade-in.
To record the Disposition of an asset with a Trade-in, the asset will be disposed in the system with an FD transaction.
The new asset will be created with an FA transaction. The new asset will be reduced by the amount of the trade-in.
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