|SUBJECT:||Mass Purchase of Equipment and Other Durables|
|SOURCE:||Capital Asset Management, Office of the Treasurer|
|ORIGINAL DATE OF ISSUE:||April 2008|
|RATIONALE:||To provide guidelines for the capitalization of equipment from mass purchases.|
|CSOP:||Equipment may be mass purchased in volume to receive volume discounts. A mass purchase is considered a volume purchase represented on one line item of a purchase order with a total cost that potentially represents multiple individual assets.
The University Capital Asset Office will determine the appropriate capitalization of the equipment and separate the mass purchase into the correct number of capital assets. The individual unit cost of each item purchased will be used to determine capitalization. The total cost of the mass purchase will not be considered in determining capitalization.
To be capitalized as equipment or as a system asset the individual unit cost or system cost of the items purchased must have (1) an acquisition value of at least $5,000 and (2) a useful life expectancy of one year or greater. Those items not meeting these two requirements will be expensed.
If the unit cost, per item purchased, is not broken out on the purchase order, the University Capital Asset Office will require an attachment to the purchase order which shows the quantity and individual unit cost as well as any system information of the items being mass purchased.
The EPIC CAMS Document for multiple systems, should be used to inform the University Capital Asset Office of how many assets should be created and any system information.
The capital assets will not begin depreciation until the University Capital Asset Office receives the attachment to the purchase order or the EPIC CAMS Document to create the correct number of assets for the organization.
See CSOP 1.0 Capitalization Rules
Mass purchases of equipment or furniture during new building construction or renovation should not be included in the cost of the building but should be capitalized as moveable equipment only if meeting the requirements specified above.
Scheduled replacement of carpeting, drapes, blinds and or window treatments mass purchased do not qualify for capitalization.
See CSOP 19.0 Capitalization of Building Projects (not published under development)
|DEFINITIONS:||Capital Assets must have an acquisition value of at least $5,000 and a useful life expectancy of one year or greater.
Equipment - The term "equipment" includes delivery equipment, office equipment, machinery, furniture and fixtures, factory equipment and similar fixed assets.
Systems are defined as components that work together to perform one function. These components must be necessary for the system to function as a whole. Removal of any one component would result in the system not operating at the required capacity or for the intended purpose.
|CROSS REFERENCE:||CSOP 1.0 Capitalization Rules
CSOP 8.0 Capitalization of Moveable Equipment
CSOP 19.0 Capitalization of Building Projects (not published under development)
Accounting Administration Policy FIN-ACC-I-150 Capitalization of Moveable Equipment
|RESPONSIBLE ORGANIZATION:||Organizations that create fabricated equipment|