89-21  Obsolete

Formerly 84-2

Equipment Policy
August 21, 1989

The policy followed in assigning expense classes for capital equipment and expendable equipment affects how items should be budgeted in a proposal.

Capital Equipment is an item having an acquisition value of $500 or more and a normal life expectancy of two years or more.

Expendable Equipment is an item having an acquisition value less than $500 and a normal life expectancy of two years or more.

Capital equipment should be budgeted in the equipment category of a proposal and excluded from the calculation of indirect cost.  Expendable equipment should be budgeted in the "supply and expense" or the "other" categories of the budget.  Indirect cost is calculated on expendable equipment.

       The following examples will help clarify what constitutes capital equipment.

Purchase of a System - When a number of items on a single requisition totaling $500 or more are purchased to operate as a system, the entire system is capital equipment even if some of the individual units making up the system are less than $500 each.  (However, items that are clearly considered supplies, which are included on an equipment requisition will continue to be coded with the appropriate supply expense classification).

Separately Purchased Items - If a $480 disc drive is purchased initially as part of a system such as the one described above, it would be coded capital equipment.  If another disc drive is purchased separately to be used with the system, it will also be capitalized if the tag number or purchase order number of the original purchase is referenced on the order.  If this information is not provided the item will be expendable equipment.

Groups of Individual Items - When a number of individual items are purchased, they will be capitalized only if the per item cost is $500 or more.  For example, 5 storage cabinets costing $480 each would be coded expendable equipment.  If they cost $520 each, they would be coded capital equipment.

Software - Beginning July 1, 1989, software packages costing $500 or more will be capitalized.