FIXED ASSETS MANAGEMENT POLICY
PURPOSE
The purpose of this policy is to:
• Control additions, disposals and existing fixed assets.
• Monitor their use and safe custody.
• Maintain optimum values
DEFINITIONS
Fixed Assets:
Fixed assets are defined as follows:
(a) tangible assets that are held for use in production or supply of goods and services, for rental to others, or for administrative purposes, and may include items held for the maintenance or repair of such assets;
(b) have been acquired or constructed with the intention of being used on a continuing basis; and
(c) are not intended for sale in the ordinary course of business.
GUIDELINES
1. Expenditure incurred in respect of fixed assets will be capitalised and depreciated on a systematic basis when:
• the cost is greater than $500 (GST exclusive), except for additions to the library collection and text books which will be capitalised on an individual title basis.
• the asset has a useful life of at least three years; and
• the expenditure is incurred in the acquisition of, or production of a fixed asset; or
• the expenditure improves the asset beyond its original service potential.
• expenditure incurred to maintain or return the asset to its original condition will not represent capital expenditure and will be treated as an operating expense, in the period incurred.
2. Depreciation
2.1 Fixed assets are depreciated on a systematic basis. Fixed assets, except for library books, are depreciated so as to charge their cost or value over their estimated useful life on a straight line basis.
2.2 Estimated useful lives are:
Classroom furniture 15 years
Office Furniture 15 years
Office Equipment 5 years
Other Equipment 5 years
Computers 4 years
Plant & Machinery 10 years
Buildings 40 years
Leasehold improvements 40 years
Playground equipment/grounds improvements 18 years
Library books are depreciated on a diminishing value basis at 12.5% per annum.
Leased equipment is depreciated over the lease term. (When classified as a finance lease under SSAP-18)
The estimated depreciation rate of each class of fixed asset is as follows:
2.5% for buildings (include leasee alterations)
10% for plant and equipment
33% for computers, electrical and electronic equipment
25% for office equipment
25% for furniture and fittings
20% for motor vehicles
33% for software
10% for Library Collection -General (DV) (Diminishing Value)
33% for Library Collection -CD ROMS
2.3 Art collections will not be depreciated because their value does not diminish with use. Items included as class sets will be accounted for on a replacement basis.
2.4 For those assets disposed of part way through the year, no depreciation will be charged. For those purchased during the year, a proportionate amount of depreciation will be charged.
2.5 Leased equipment is depreciated over the lease term. (When classified as a finance lease under SSAP-18)
3. Recording Valuation
3.1 Onewhero Area School will maintain a Fixed Asset Register.
3.2 Sets of specialist classroom furniture and equipment with an individual value of $500 (exclusive of GST) or more per item and having a useful life of at least three years or more will be recorded in the Fixed Asset Register as one item.
3.3 Assets purchased shall be recorded on the Assets Register at cost. This includes ancillary cost of purchase, e.g. duty paid, delivery and installation cost. Donated assets will be recorded at the value the item would reasonably cost if it was purchased through normal supply channels, taking into account the age and serviceability of the asset.
3.4 Land and Buildings not owned by the Ministry of Education will be stated at cost less depreciation.
3.5 All other fixed assets will be individually recorded and identifiable.
4. Disposals:
4.1 Fixed assets will be disposed of/written off when either of the following criteria has been met:
• The asset can no longer be employed in the ordinary course of business by the Onewhero Area School.
• Lost or stolen.
• The asset is beyond reasonable repair.
4.2 Fixed assets to be disposed of will be identified to the Board of Trustees by the Principal in writing, with recommendation for disposal.
4.3 The Board will approve of fixed assets disposal, and where possible, agree on the means of disposal and any cost recovery to be sought.
4.4 If fixed assets approved for disposal are to be offered to staff for purchase, this will be done by tender and executed by the Office manager to recover maximum value.
4.5 Disposal of assets that are not on the fixed asset register because the asset is under the required value of $500 must be recorded on the school inventory and any disposal will be in the same manner as 5.3 and 5.4.
5. Responsibilities:
5.1 Heads of Department, TIC and syndicate leaders are responsible for:
• Receipt and installation of assets via the Executive Officer;
• Operational use, servicing, repair and safety;
• Secure custody and control of loans (all personal loans to be recorded);
• Annual stock-take leading to certification of the correction to asset records.
5.2 The Principal and or Office manager is responsible for:
• Ordering of all assets.
• The accuracy and completeness of the Asset Register;
• Provision of current equipment lists to HOD’s, TIC and syndicate leaders on a regular and timely basis;
• Control and monitoring of fixed assets to ensure best use of school resources;
• Write-offs, disposals;
• Co-ordination of the annual fixed asset audit;
• Reports;
• Recording of assets in the Onewhero Area School's financial statements.
6. Recognition:
Items of property, plant and equipment with an individual value in excess of $500 are capitalized on purchase.
6.1 Other items with an individual value below $500 are expensed with the exception of furniture and fittings that are purchased in quantity where the total value exceeds $500, such as classroom sets of desks and chairs. This is to reflect their significant total value as a percentage of the total assets held by the school.
6.2 Textbooks even when purchased in quantity, are recorded as a learning resource expense and not capitalized on purchase. This reflects the high usage and frequent curriculum changes that make textbooks obsolete.
6.3 Minor sports and teaching equipment even when purchased in quantity, are recorded as a learning resource expense and not capitalized on purchase. This reflects the need for regular replacement of these items and their overall low total value when compared to the total fixed asset holding.
Board of Trustees Chairperson: ________________________ 27/10/2009
Policy reviewed, October 2009. Next review date October 2012
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