Disposing Assets — Asset Life Cycle Management
The definition of asset disposal
Asset Disposal is an event where the asset is no longer going to be used for its original purpose. The asset is deleted or deactivated in the Enterprise Asset Management system. It is a key process in the life-cycle of asset management.
There are three main options for asset disposal:
- Transfer the asset to a different location. This is used for a variety of purposes.
- Ship the assets to its owner. For many government contractors or federal grantees, this happens after the contract or grant closes out.
- Retire assets. This requires recording of asset disposal in some standard ways defined by the organization
eQuip! software system has a robust workflow supporting asset retirement. An eQuip! developer explains:
Because we recognize that retiring IT hardware often involves unique processes to ensure data security, the eQuip! software has different processes for retiring IT assets and non-IT assets.
For an in-depth look at how to retire assets in eQuip! watch the video below
The retire assets function in eQuip! has several asset retirement options:
- You intend to donate the asset to a charity. For-profit organizations may be able to count donations as a deduction on their tax returns.
- To Be Sold
- You have not yet sold the asset but anticipate doing so.
- The sale of property via trade-ins, exchange sales, annual or term contracts, auctions, and/or fixed-price and negotiated sales.
- This is further explained in the section below.
- The asset is taken to an electronic recycling center so its materials can be recycled. This option mainly applies to IT assets.
- The asset can no longer use this asset and cannot dispose of it by other means.
- The asset cannot be located and you wish to deactivate the asset.
- The asset is identified as stolen and cannot be recovered.
- Gifted to employees
- The asset will be given to an employee.
- This category is miscellaneous and covers any situation not applicable to the previous categories.
Cannibalizing and re-using assets
A commonly-applied principle in the field of property management is that “Excess shall be the first source of supply.”
This simply means that organizations should have an effective way to review and, where possible, re-utilize available excess property before acquiring new items.
This may take the form of cannibalizing an asset, in which an asset is broken down and its parts are used in other assets. This is common with mechanical equipment.
Key benefits of effectively managing the asset disposal process:
You ensure the consistency of your physical inventory and inventory list on the financial records
You provide information for financial departments to make the best decision on repair vs. replacement
You can generate additional revenue from reselling retired assets
You ensure compliance in disposing electronic equipment, and zero landfill policy