ACQUISITION AND TITLE
Equipment is acquired by the University through purchase, donation, capital lease or Government funding. The title to capital equipment vests with the University unless specifically stated otherwise in donation or award documentation.
Copies of donor letters and/or grant contracts will be requested when needed to determine ownership.
- Direct Purchase: The majority of University capital equipment is acquired through direct purchase using the same procurement policies and procedures as those for any other product.
- Donation: The Advancement Office will inform Accounting Services of any equipment gifts with an estimated fair market value that meets or exceeds the University’s capitalization thresholds. Any donation over $5,000 is required to be supported by an appraisal.
- Capital Lease: The Department of Contracting and Procurement must provide Accounting Services with copies of all lease agreements. Accounting Services will determine if it is a capital lease if it meets at least one of the following criteria.
- Ownership transfers to the University at the end of the lease.
- It contains a bargain purchase option.
- The period is at least 75% of its useful life.
- The present value of the lease payments is at least 90% of fair market value.
- Government Funded or Furnished Capital Equipment
- Government Funded: Unless otherwise specified in the sponsored award agreement, title to capital equipment purchased or fabricated with Government funds will vest with the University. In special situations the sponsored award agreement may require that title to such capital equipment pass directly to the Government. In these cases, the University is prohibited from capitalizing the asset and recognizing the depreciation expenses. However, if the asset must be tracked, the asset is tagged, labelled and entered into the fixed asset inventory.
- Government Furnished Capital Equipment: Sponsored activity may result in the University obtaining use and/or ownership of capital equipment outside the procurement process. If title passes to the University, the items must be valued by methods similar to those described in the Donation section above. If title does not pass to the University, the University is prohibited from capitalizing the asset and recognizing depreciation expense. The asset will be tagged, labeled and entered into the fixed asset inventory for tracking and control purposes. In either case, the PI is responsible for notifying the Accounting Department.
- Loaned Capital Equipment: Capital equipment on loan to the University from an external organization must have prior written approval of the receiving department head/chair or his/her designee. Assets on loan to the University cannot be further loaned to an external organization or individual without the written approval of the title holder. All equipment on loan to the University must be reported to Accounting by the PI using the Equipment Disposal / Adjustment Form. Such assets will be entered into the fixed asset inventory for tracking and control purposes. When capital equipment is returned, the PI must inform Accounting using the Equipment Disposal / Adjustment Form.
PHYSICAL INVENTORY OF CAPITAL ASSETS