The cost to be capitalized includes the purchase price and those costs necessary to place the equipment in service (i.e., freight/transportation and setup costs such as installation and testing).  Repairs, maintenance parts or components, warranty costs, maintenance contracts or annual software licensing fees are not considered capital equipment and will be expensed. 

Equipment purchases that do not meet the capitalization threshold are expensed as supplies (i.e., Research and Laboratory Supplies (account code 72162), Other Supplies and Materials (account code 72164) or Computers and Related Components (account code 72166).  If the fabricated equipment components meet the threshold for capital equipment, it should be assigned to account code 714 (Fabricated Equipment).

Installment purchases of equipment will be capitalized in account code 713 (Installment Purchases), if it meets the capitalization threshold and when the substance of the vendor agreement effectively gives the University ownership of the equipment being leased.    

If the system component purchases meet the capitalization threshold, the transaction(s) should be assigned to account code 711 (Capitalized Equipment).

If the cost of the enhancement or modification is $2,000 or greater and cannot operate independently, the purchase should be assigned to account code 715 (Equipment Enhancement). The tag number of the existing equipment should be included in the requisition document text.

Single item equipment purchases acquired with Sponsored funds when the title/ownership vests with the Sponsor should be assigned to account code 716 (Sponsor Owned Equipment). Section 6.1 of this policy addresses additional procedures applicable to all equipment purchased with federal funds.