Fixed Assets and Construction in Progress 

Use of standard useful lives for fixed assets

​​The University maintains a policy of standard useful lives for its fixed assets. The use of standard useful lives provides consistent calculation of depreciation for items of like asset class.​ These useful lives are incorporated in the SAP fixed asset module. The useful lives are as follows:

(updated 8/01/2020)

Disposal of fixed assets purchased with federal funds

Funds received from federal grants may be used to purchase fixed assets if allowed by the awarded federal grant contract. When the fixed asset is no longer needed for the project funded by the grant, the fixed asset may be disposed. In the following excerpts from Federal Grants Management Handbook, guidelines for the disposal of such assets are outlined:

Real property includes buildings, land(including improvements), and structures. If a grantee can no longer use the real property, the federal agency will direct the grantee to:

• Sell the property and pay the federal agency its share of the proceeds according to matching or cost-sharing ratios;
• Retain the property and pay the agency its share of the market value of the property; or
• Transfer title to the federal agency and receive its share of the market value.

Equipment includes tangible personal property having an acquisition cost in excess of $5,000 and a useful life of more than one year. (Note that Central Michigan University expenses purchases of tangible personal property with an acquisition cost of less than $5,000 as a low-value asset at the time of purchase.) If... the current market value of the equipment is less than $5,000, the grantee may sell or retain it without compensating the federal government. If the property is worth $5,000 or more, a grantee has several options from which to choose (see the Federal Grants Management Handbook for more details). However, in the absence of instructions from the awarding agency within 120 days after the end of federal support of the project, grantees may either retain or sell the equipment and pay the federal agency their share of the market value. A grantee can sell the equipment and pay the agency its share of the proceeds, which, in the case of a university, is the proceeds, less the greater of $500 or 10%, whichever is less.

Central Michigan University Accounting Services will review the disposal of fixed assets annually to determine if proceeds from the sale of any fixed assets must be remitted to the federal agency that originally awarded the funds.​

Closing internal orders used for construction in progress (CIP) projects

​​Facilities Management requests the closing of Internal Orders used for individual construction projects. The Facilities Management (FM) Administrative Clerk obtains the Project Completion Form which has been signed and approved by the Project Director and Director of Plant Engineering and Planning for the project. This form indicates whether the project expenditures improved or maintained the asset, the total amount expended on the project, the project budget, and the excess budget funding to be returned. The FM Administrative Clerk also ensures that no open purchase orders exist for the internal order to be closed.

Upon receipt of the Project Completion Form, the Plant Fund Accountant verifies that the excess budget funds were returned to the cost center(s) or annual deferred maintenance internal order from which the project was originally funded. The Plant Fund Accountant also verifies that the total expenditures amount reported on the Completion Form agree to the total expenditures amount per SAP. The Accountant then capitalizes or expenses them in accordance with the information provided on the completion form provided by Facilities Management and with CMU's Capitalization Policy. The Plant Fund Accountant then closes the internal order and updates the CIP spreadsheet for the closing of the internal order.​