SUBSECTION 2.2.4.6
FIXED ASSETS

2.2.4.6.1

General

Effective Date:

Sept. 1, 1998

Fixed assets are tangible assets held and used in state operations which have a service life of more than one year. (Refer to Part 3 of this manual.) Fixed assets with a unit cost of $5,000 or more are capitalized. Capitalized fixed assets are classified for general ledger purposes as land, buildings, improvements other than buildings, furnishings and equipment, and construction in progress. Section 7.2.3.2 of this manual describes the various fixed asset general ledger codes.

2.2.4.6.2

Asset Valuation

Effective Date:

Sept. 1, 1998

Valuation requirements for capitalized fixed asset are listed in the inventory policies in Part 3 of this manual.

2.2.4.6.3

Acquisition of Fixed Assets

Effective Date:

Sept. 1, 1998

2.2.4.6.3.a

2.2.4.6.3.a(1)

Governmental and Expendable Trust Fund Type Accounts-- In governmental and expendable trust fund type accounts, acquisitions of capitalized fixed assets are recorded by debiting GL Code 6510 "Cash Expenditures/Expenses" with an appropriate subobject within Object J "Capital Outlay." For accountability purposes, the asset is also recorded in Account 997 "General Fixed Assets Account Group." The additional entry debits GL Code Series 2XXX "Fixed Assets" and credits GL Code Series 98XX "Investment in General Fixed Assets" in Account 997. (Refer to Section 2.2.4.7.22.a for illustrative entries.)

When capitalized fixed assets are donated to a governmental or expendable trust fund type account, the fixed assets are recorded in Account 997 "General Fixed Assets Account Group" at their estimated fair market value at the date of donation plus all appropriate ancillary costs.

2.2.4.6.3.a(2)

Proprietary and Similar Trust Fund Type Accounts--In proprietary and similar trust fund type accounts, acquisitions of capitalized fixed assets are recorded by debiting GL Code Series 2XXX "Fixed Assets." Budgeted proprietary accounts, require an additional entry to record the appropriated expense. This entry debits GL Code 6510 "Cash Expenditures/Expenses" with an appropriate sub-object within Object J "Capital Outlay" and credits GL Code 6525 "Expense Adjustments/ Eliminations (GAAP)" with the same sub-object code. (Refer to Section 2.2.4.7.22.b for illustrative entries.)

Donations of capitalized fixed assets to proprietary and similar trust fund type accounts are recorded in the acquiring account by debiting GL Code Series 2XXX "Fixed Assets" and crediting GL Code 9300 "Contributed Capital." (Refer to Section 2.2.4.7.22.b for an illustrative entry.)

2.2.4.6.3.b

Non-capitalized Fixed Assets--Purchases of non-capitalized fixed assets, those which do not meet the state’s capitalization policy (for example those with a unit cost under $5,000) are to be recorded by debiting GL Code 6510 "Cash Expenditures/Expenses" with an appropriate sub-object, for example, JA "Non-inventoriable Assets." (Refer to Section 2.2.4.7.23 for an illustrative entry.)

2.2.4.6.4

Depreciation

Effective Date:

Sept. 1, 1998

2.2.4.6.4.a

Governmental and Expendable Trust Fund Type Accounts--Allowance for depreciation for capitalized fixed assets is to be recorded in Account 997 "General Fixed Assets Account Group." This entry debits GL Code Series 98XX "Investment in General Fixed Assets" and credits GL Code Series 2X20 "Allowance for Depreciation." The straight-line method with no salvage value is to be used in computing depreciation. Section 3.2.3.1 contains Schedule A which lists the Fixed Asset Commodity Code List and Useful Life Schedule. Refer to Section 3.1.2.2.6.c. (Refer to section 2.2.4.7.24.a for an illustrative entry.)

2.2.4.6.4.b

Proprietary and Similar Trust Fund Type Accounts--Depreciation expense for capitalized fixed assets is to be recorded in the same account in which the fixed asset is recorded by debiting GL Code 6511 "Depreciation Expense" with Sub-object WA "Depreciation Expense," and by crediting GL Code Series 2X20 "Allowance for Depreciation." The straight-line method with a salvage value is to be used for the computation of depreciation expense. Section 3.2.3.1 contains Schedule A which lists the Fixed Asset Commodity Code List and Useful Life Schedule. Refer to Section 3.1.2.2.6.d. (Refer to Section 2.2.4.7.24.b for an illustrative entry.)

2.2.4.6.5

Disposals of Capitalized Fixed Assets

Effective Date:

Sept. 1, 1998

Entries are to be made during the year to record the disposition of capitalized fixed assets.

2.2.4.6.5.a

Governmental and Expendable Trust Fund Type Accounts--Dispositions of capitalized fixed assets, originally acquired by governmental and expendable trust fund type accounts, are to be recorded in Account 997 "General Fixed Assets Account Group." Capitalized fixed assets disposed of during the year are recorded by debiting GL Code Series 2X20 "Allowance for Depreciation" for the accumulated depreciation to date, debiting GL Code Series 98XX "Investment in General Fixed Assets" for the asset's undepreciated (net book) value, and crediting GL Code Series 2XXX "Fixed Assets" for the original cost of the asset.

Net proceeds received from the disposition of a capitalized fixed asset are generally recorded in the account which originally acquired the asset. If an estimate of the net proceeds from disposition was included in the budget for replacement fixed asset acquisitions and the expenditure for the acquisition of the new fixed assets has already been recorded at gross, then the following entry is to be made. The net proceeds are to be debited to GL Code Series 71XX "In-Process," or GL Code 1110 "Cash in Bank" and credited to GL Code 6510 "Cash Expenditures/Expenses" with the same appropriation and Object J coding used to record the acquisition of the replacement asset. This entry reduces the expenditure to net. (Refer to Section 2.2.4.7.25.a for illustrative entries.)

If the net proceeds from disposition were not included in the budget for new fixed asset acquisitions, the net proceeds received are to be recorded by debiting GL Code Series 71XX "In-Process" or GL Code 1110 "Cash in Bank" and crediting GL Code 3210 "Cash Revenue" with Revenue Source Code 0416 "Sale of Property - Other." (Refer to Section 2.2.4.7.25.a for illustrative entries.)

If a fixed asset originally acquired by a governmental or expendable trust fund type account is used as a trade-in for a new fixed asset, the asset traded-in is removed from Account 997 "General Fixed Assets Account Group" similar to a sale above. The new fixed asset is recorded at its cost net of the trade-in as an expenditure in the operating account. In Account 997 "General Fixed Assets Account Group," the new asset is recorded at what would have been its cash price without a trade-in. (Refer to Section 2.2.4.7.26.a for an illustrative entry.)

2.2.4.6.5.b

2.2.4.6.5.b(1)

In proprietary and similar trust fund type accounts, dispositions of capitalized fixed assets are accounted for in the account where the asset is recorded. Disposals of capitalized fixed assets are recorded by debiting GL Code Series 2XXX "Allowance for Depreciation" for the accumulated depreciation to date, debiting GL Code Series 71XX "In-Process," or GL Code 1110 "Cash in Bank" for the net proceeds received (if any), crediting the appropriate GL Code Series 2XXX "Fixed Assets" for the original cost of the asset, and a balancing entry to GL Code 3213 "Gain and Loss on Sale of Capitalized Fixed Assets" with Revenue Source Code 0418 "Gain or Loss on Sale of Fixed Assets." (Refer to Section 2.2.4.7.25.b for illustrative entries.)

2.2.4.6.5.b(2)

In budgeted proprietary and similar trust fund type accounts, an additional entry is required to record the net proceeds received upon disposition.

If the estimated net proceeds from disposition were included in the budget for replacement fixed asset acquisitions and the purchase of the new fixed asset has been recorded at gross, then the following entry is to be made. The agency is to debit GL code 6525 "Expense Adjustments/ Eliminations (GAAP)" with an appropriate sub-object within Object J and credit the appropriate GL Code 6510 "Cash Expenditures/Expenses" with the same sub-object for the net proceeds received from disposition. This entry reduces the appropriated expense to net. (Refer to Section 2.2.4.7.25.b for illustrative entries.)

If the estimated net proceeds from disposition were budgeted (but was not included in the budget for new fixed asset acquisition(s)), then the entry is to debit GL Code 3225 "Revenue Adjustments/Eliminations (GAAP)" with Revenue Source Code 0416 "Sale of Property - Other" and credit GL Code 3210 "Cash Revenues" with the same revenue source code. (Refer to Section 2.2.4.7.25.b for illustrative entries.)

2.2.4.6.5.b(3)

In proprietary and similar trust fund type accounts, no gain is recognized on a trade-in. The fixed asset traded-in and its associated accumulated depreciation are removed from the accounting records and the balancing entry is added to the cost of the new fixed asset. (Refer to Section 2.2.4.7.26.b for an illustrative entry.)

2.2.4.6.5.b(4)

Disposals of donated fixed assets in proprietary and similar trust fund type accounts are recorded by crediting GL Code Series 2XXX "Fixed Assets" for the value originally assigned to the asset and debiting GL Code 9300 "Contributed Capital." An additional entry is required to debit cash for the amount of the sale proceeds (if any), debit the accumulated depreciation associated with the donated fixed asset, and credit GL Code 3213 "Gains and Losses on Sales of Capitalized Fixed Assets" with Revenue Source Code 0418 "Gain or Loss on Sale of Fixed Assets." (Refer to Section 2.2.4.7.25.b for illustrative entries.)

2.2.4.6.6

Adjustments to Capitalized Fixed Assets

Effective Date:

Sept. 1, 1998

The balance in GL Code Series 2XXX "Fixed Assets" is to agree with the balance of the detail listing of the fixed assets meeting the state’s capitalization policy in the agency’s authorized capital asset management system. Agencies using the state’s Capital Asset Management System (CAMS) are provided with fixed asset reports for both cost and depreciation showing beginning balances, additions, deletions, and ending balances. Agencies not using the state’s CAMS are to develop similar fixed asset reports. Quarterly, all agencies, are to reconcile their authorized capital asset management system with the balances in GL Code Series 2XXX to ensure the accuracy of the balances in the general ledger. As a result of this reconciliation, prior period adjustments may be required. Prior period adjustments are discussed further at Section 5.1.2.1.3 and illustrated at Section 5.1.2.2.3.

2.2.4.6.7

Fixed Assets Acquired Through Capital Lease

Effective Date:

Sept. 1, 1998

2.2.4.6.7.a

Governmental and Expendable Trust Fund Type Accounts--Fixed assets acquired through capital lease are to be capitalized only if the net present value of the future minimum lease payments and the fair market value at inception of the lease is $10,000 or more. The amount to be capitalized is the lesser of the fair market value or net present value. The entry is to debit GL Code 6514 "Fixed Assets Acquisitions by Lease/Installment Purchase" with an appropriate sub-object within Object J, and credit GL Code 3221 "Non-cash Other Financing Sources" with Revenue Source Code 0709 "Non-cash Capital Lease Acquisition."

Corresponding entries are made in (a) Account 997 "General Fixed Assets Account Group" by debiting GL Code Series 2XXX "Fixed Assets" and crediting GL Code Series 98XX "Investment in General Fixed Assets" (refer to Section 2.2.4.7.27.a for illustrative entries), and (b) Account 999 "General Long-Term Obligations Account Group" to record the related lease liability. Section 2.2.5.5.7.a shows detailed illustrations for recording lease liabilities and subsequent payment of leases in Account 999.

Capital lease acquisitions which fall below the $10,000 capitalization limit are to be treated like operating leases until after the date of actual transfer of ownership. Operating lease payments are to be recorded by debiting GL Code 6510 "Cash Expenditures/Expenses" with Sub-object ED. If non-capitalized leased assets are subsequently acquired (i.e., through transfer of title at the end of the lease period), they are to be recorded in Account 997 "General Fixed Assets Account Group" at fair market value at the time of transfer of title. (Refer to Section 2.2.4.7.27.a for illustrative entries.)

2.2.4.6.7.b

Proprietary and Similar Trust Fund Type Accounts--In proprietary and similar trust fund type accounts, capital lease acquisitions where the net present value of the future minimum lease payments and fair market value at inception is $10,000 or more, are to be recorded in the acquiring account by debiting GL Code Series 2XXX "Fixed Assets" and crediting the appropriate lease liability GL code. The amount to be capitalized is the lesser of the fair market value or net present value. Section 2.2.5.5.7.b shows detailed illustrations for recording lease liabilities and subsequent payment of leases. (Refer to Section 2.2.4.7.27.b for illustrative entries.)

Capital lease acquisitions which fall below the $10,000 capitalization limit are recorded like operating leases (expensed) until after the date of actual transfer of ownership. Operating lease payments are to be recorded by debiting GL Code 6510 "Cash Expenditures/Expenses" with an appropriate object code. If non-capitalized leased assets are subsequently acquired (i.e., through transfer of title at the end of the lease period), they are to be valued at fair market value at the time of the title transfers. The asset is recorded by debiting GL Code Series 2XXX "Fixed Assets" and crediting GL Code 3210 "Cash Revenues" with Revenue Source Code 0716 "Recoveries of Prior Appropriation Expenditures." (Refer to Section 2.2.4.7.27.b for illustrative entries.)

2.2.4.6.8

Fixed Assets Acquired Through Certificates of Participation

Effective Date:

Sept. 1, 1998

2.2.4.6.8.a

Governmental and Expendable Trust Fund Type Accounts--Fixed assets acquired through the Office of the State Treasurer (OST) Certificate of Participation (COP) program are recorded by a debit to GL Code 6514 "Fixed Asset Acquisitions by Lease/Installment Purchase" with an Object J and a credit to GL Code 3221 "Non-cash Other Financing Sources" with Revenue Source Code 0707 "Non-cash Certificates of Participation." When the asset acquired meets the state’s capitalization policy, a corresponding entry is also made in the General Fixed Assets Account Group. All COP obligations are recorded in the General Long-Term Obligations Account Group. Refer to Section 2.2.5.2.4.

2.2.4.6.8.b

Fixed assets acquired through OST’s Certificate of Participation program that meet the state’s capitalization policy are capitalized in the acquiring account. All COP obligations are recorded in the account acquiring the fixed asset. Refer to Section 2.2.5.2.4.

2.2.4.6.9

Accounting for the Construction of Fixed Assets

Effective Date:

Sept. 1, 1998

2.2.4.6.9.a

Governmental and Expendable Trust Fund Type Accounts--All costs incurred for the construction of fixed assets are recorded in the account incurring the expenditure by debiting GL Code Series 65XX "Expenditure/Expenses" with an appropriate subobject within Object J. For construction projects not completed at the end of the accounting period, a corresponding entry is made to record the construction in progress in Account 997 "General Fixed Assets Account Group." This is accomplished by debiting GL Code 2510 "Construction in Progress" and crediting the appropriate GL Code Series 98XX "Investment in General Fixed Assets." (Refer to Section 2.2.4.7.28.a for illustrative entries.)

Upon completion of the project, construction costs accumulated in the construction in progress account are reclassified to the appropriate fixed asset GL code in Account 997 "General Fixed Assets Account Group." (Refer to Section 2.2.4.7.28.a for illustrative entries.)

Agencies that finance fixed asset construction through OST's COP Construction Program should refer to Section 2.2.5.2.4.d for more information regarding accounting requirements related to the COP construction program.

2.2.4.6.9.b

Proprietary and Similar Trust Fund Type Accounts--In proprietary and similar trust fund type accounts, all costs incurred for the construction of fixed assets are to be recorded in the account incurring the costs by debiting GL Code 2510 "Construction in Progress." Budgeted proprietary accounts require an additional entry to record the costs. This entry debits GL Code Series 65XX "Expenditures/Expenses" with an appropriate sub-object within Object J, and credits GL Code 6525 "Expense Adjustments/Eliminations (GAAP)" with the same sub-object code. (Refer to Section 2.2.4.7.28.b for illustrative entries.)

Upon completion of the project, the balance in GL Code 2510 "Construction in Progress" is reclassified to the appropriate fixed asset GL code. This entry debits GL Code Series 2XXX "Fixed Assets" and credits GL Code 2510 "Construction in Progress" for the total costs accumulated. (Refer to Section 2.2.4.7.28.b for illustrative entries.)

2.2.4.6.10

Accounting for the Transfer of Vehicles to the State Motor Pool

Effective Date:

Sept. 1, 1998

An unusual accounting situation arises when a state agency that has purchasing authority purchases a vehicle but does not have the resources to manage or maintain it. Typically, the agency transfers ownership of the vehicle to the Department of General Administration (GA).

The purchasing agency has exclusive use of the vehicle and GA treats the vehicle as part of the State Motor Pool, maintaining it and tracking its usage. GA charges the agency normal vehicle rates for use and applies a credit for the vehicle capital costs. Refer to RCW 43.19.605.

2.2.4.6.10.a

Accounting for the purchase and transfer of the vehicle to GA depends on the fund type of the account used to purchase the vehicle.

2.2.4.6.10.a(1)

Governmental and Expendable Trust Accounts--The acquisition of the vehicle is recorded by debiting GL Code 6510 "Cash Expenditures/Expenses" using Sub-object JC and crediting either GL Code 71XX "In-Process" or GL Code 1110 "Cash in Bank."

2.2.4.6.10.a(2)

Proprietary and Similar Trust Accounts—The acquisition of the vehicle is recorded by debiting GL Code 1510 "Prepaid Expense" and crediting either GL Code 71XX "In-Process" or GL Code 1110 "Cash in Bank." NOTE: Budgeted proprietary accounts require an additional entry to record the budgeted expense. This entry debits GL Code 6510 "Cash Expenditures/Expenses" using Subobject JC "Furnishings, Equipment and Software" and credits GL Code 6525 "Expense Adjustments/Eliminations (GAAP)" using Subobject JC.

2.2.4.6.10.b

GA records the transfer of ownership in Account 037 "Motor Transport Account" by debiting GL Code 2410 "Furnishings and Equipment" and crediting GL Code 5292 "Deferred Revenue - Long-Term."

2.2.4.6.10.c

Accounting for the usage of the vehicle depends on the fund type of the account that initially purchased it.

2.2.4.6.10.c(1)

Governmental and Expendable Trust Accounts-- The net amount billed by GA for the vehicle is recorded by debiting GL Code 6510 "Cash Expenditures/Expenses" using Sub-object GN "Motor Pool Services" and crediting either GL 71XX "In-Process" or GL Code 1110 "Cash in Bank."

2.2.4.6.10.c(2)

Proprietary and Similar Trust Accounts-- The net amount billed by GA for the vehicle is recorded by debiting GL Code 6510 "Cash Expenditures/Expenses" using Subobject GN "Motor Pool Services" and crediting either GL Code 71XX "In-Process" or GL Code 1110 "Cash in Bank." All proprietary accounts must also record the amortization of the vehicle cost by debiting GL Code 6525 "Expense Adjustments/Eliminations (GAAP)" using Subobject GN and crediting GL Code 1510 "Prepaid Expenses."

2.2.4.6.10.d

GA records the revenue for the vehicle in two steps: first, GA records the payment from the agency using the vehicle by debiting GL Code 71XX "In-Process" and crediting GL Code 3210 "Cash Revenues" using Revenue Source Code 0420 "Charges for Services;" and second, GA records the amortization of the vehicle cost by debiting GL Code 5292 "Deferred Revenue - Long-Term" and crediting GL Code 3210 using Revenue Source Code 0420.