Capital Asset Internal Sale or Disposal
Capital assets include land, buildings, furniture, equipment, books, artwork, and other assets funded from any source, including research awards. At the University of Toronto, an item counts as a capital asset when it fits this description, has a life expectancy of more than one year, and is worth $5,000 or more, excluding related costs such as freight and taxes. This holds regardless of whether the purchase was funded from operating, ancillary, capital, or restricted funds.
The University keeps no central list of capital assets, so each department is required to maintain its own record, or inventory, to support management and audit requirements. For the full policy, see the Guide to Financial Management, Capital Assets.
Determining Fair Market Value (FMV) for Capital Assets
Departments are responsible for conducting an initial assessment of the Fair Market Value (FMV) of capital assets being disposed of and providing supporting documentation. Procurement Services will review the information submitted and determine whether the proposed FMV is reasonable before approving the valuation.
What is Fair Market Value?
Fair Market Value (FMV) is the estimated price that a capital asset would reasonably sell for in an open and competitive market, where both the buyer and seller are knowledgeable, willing to transact, and under no obligation to buy or sell.
Here are the steps to establish the asset(s) fair market value and submit for review.
1Gather Information About the Capital Asset
Provide the following information for each capital asset, where available:
- Asset description
- Manufacturer (make)
- Model number
- Serial number
- Year purchased or manufactured
- Original purchase price
- Current condition
- Operational status
- Included accessories, components, software, or attachments
- Any significant maintenance, repairs, or upgrades that may affect value
2Identify Comparable Market Evidence
Research the current market value of comparable capital assets using reputable sources whenever possible. Examples include:
- Manufacturer or distributor websites
- Used equipment or asset dealers
- Industry-specific resale marketplaces
- Online marketplaces showing completed or sold listings (e.g., eBay Sold Listings)
- Government or university surplus sales
- Public auction results
Where practical, identify at least three comparable sales or listings.
When selecting comparable assets, consider:
- Manufacturer and model
- Age
- Condition
- Functionality
- Configuration and included accessories or components
- Market demand
If an identical asset cannot be found, identify the closest comparable asset and explain any significant differences.
3Determine a Recommended FMV
Based on the available market research, recommend an FMV that reflects the price the capital asset could reasonably be expected to achieve if sold in its current condition.
When determining the recommended FMV, consider:
- Physical condition and operational status
- Age and technological obsolescence
- Completeness of the asset (including accessories or missing components)
- Maintenance or service history, where relevant
- Current market demand
- Comparable selling prices
Do not rely solely on the original purchase price or replacement cost, as these may not reflect current market value.
4Complete and Submit the Form
On Section A of the Capital Asset Disposal Form, list each asset: quantity, description, make, model/serial number, location, and original cost. If the cost is unknown, enter “Not available” and include the PO number or purchase year. Use page two for additional items.
Along with the form, include:
- Links, screenshots, or copies of comparable sales or listings
- Notes explaining any adjustments made when comparing assets
- A brief explanation of how the recommended FMV was determined
Submit the completed form and your supporting documentation through the Procurement Services Request Portal.
Procurement Review Procurement Services
Procurement Services will assess whether the proposed FMV is supported by the documentation submitted. Following its review, Procurement Services may:
- Approve the recommended FMV;
- Adjust the FMV based on the available market evidence; or
- Request additional market research or supporting documentation before making a final determination.
For specialized, unique, or high-value capital assets where sufficient market information is not available, Procurement Services may require an independent appraisal or additional supporting evidence before approving the FMV.
Procurement Services completes Section B and returns the form to your department.
After Procurement approves the FMV
Find a buyer
Finding a buyer is your department’s responsibility. First check whether another University department or user needs the asset, as it shouldn’t be disposed of externally if it can be reused internally. If no University buyer has been identified, take steps to find one.
Obtain approval
Once you have a buyer, complete Sections C, D, E, F, G, following the Approval of Disposals and Allocations of Proceeds chart and the Internal Sales of Capital Assets guidance. If there’s no buyer and the FMV is $200 or less, use the U of T Free Store or call: 416-978-7080
Send the completed form to Financial Services
When the transfer or disposal is complete, send a copy of the form to Capital Accounting:
Additional Information
Trade-ins
Send Procurement a copy of the form, referencing the FIS purchase order number, or the FIS purchase requisition number for equipment that cost over $25,000 before the trade-in.
External sales
Invoice the buyer and attach the completed form to the Accounts Receivable copy of the invoice. Process the invoice following established procedures, then remove the asset from your records.
Internal sales
Process the journal entry in FIS for the sale proceeds. Remove the asset from your records; the buying department adds it to theirs.
Tax (HST)
Equipment used in commercial activities is subject to HST when sold. Equipment used for research or administration is not.
Sales outside Canada
Transferring an asset out of Canada? Consult the University Customs Broker about duties and cross-border rules.
Payment for external sales
Send payments for invoiced external sales to Accounts Receivable, 150 College Street, 3rd Floor, Room 350, Toronto, ON M5S 3E2.
If collection is in doubt, release the asset only after payment is received.