Financial Reporting is responsible for presenting fairly the assets of the UW System in its Annual Financial Report. Each institution must report by August 15th the cost of its capital equipment, the accumulated depreciation and the net book value. Federally titled equipment should not be included in the report.
In general, depreciation should be recorded on a straight line basis using the useful lives shown in Attachment G and no salvage value. A full year’s depreciation should be calculated in the year of acquisition regardless of the month acquired. Alternative depreciation policies may be applied, where supportable, based on operating experience or where required by the federal indirect cost agreement negotiated with the institution’s cognizant agency.
For works of art, a footnote disclosure regarding the estimated current market value in lieu of reporting a cost-based amount is acceptable. Works of art may be excluded from inclusion in the financial reports if all of the following criteria are met:
they are held for exhibition, education, or research in furtherance of public service rather than for financial gain;
they are protected, kept unencumbered (i.e., not pledged as collateral), cared for and preserved; and
they are subject to a policy that requires the proceeds from sales of collection items to be used to acquire other items for collections.
The cost of purchased software should not be capitalized for financial reporting purposes since such software is generally licensed and not owned. Software developed in-house should also not be capitalized for financial reporting purposes because the estimated cost of recreating it is not reimbursable under the State’s risk management plan.
In addition to reporting historical costs and accumulated depreciation of capital equipment as of June 30, institutions are required to reconcile the current June 30 value to the value reported for the preceding June 30 by showing additions, deletions, current year depreciation, write-offs, etc. The amount reported as current year additions per the capital equipment inventory system should be reconciled to the capital disbursements recorded in the accounting system.