Disposing Assets — Asset Life Cycle Management
A critical process in the life-cycle of physical assets
The definition of asset disposal
Asset Disposal is a key process in the life-cycle of asset management. It 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.
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
The eQuip! enterprise asset management system has a robust workflow supporting asset retirement.
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.
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 in the asset life cycle:
- 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