Capital Equipment

Last updated: 02/01/2019 - 1:06pm

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Definition

Capital Equipment

 

What qualifies an item as capital equipment?

- Purchased equipment with a unit cost of $5,000 or more and a useful life equal or greater than 1 year. 

- Fabricated equipment with a finished product cost of $5,000 or more and a useful life equal or greater than 1 year.

- Computer software of at least $5,000,000 (5 million dollars) per software title and a useful life equal or greater than 1 year.

 

How is the unit or finished product's cost calculated?

The purchase price, per unit or per finished product, must meet the definition for capital equipment prior to the addition of:

  - Sales tax or/ use tax

  - Customs fees

  - Freight and transportation fees

  - Site preparation costs (e.g. laboratory renovations)

  - Professional fees

  - Installation fees

 

AT PROPOSAL TIME

 

Question #1: If the item qualifies as capital equipment where should it be budgeted?

The item(s) are budgeted in the "equipment" line of the budget unless otherwise stipulated by the sponsor.

 

Question #2: Other than the unit cost, what else should be included in the “equipment” budget line?

  • In-state sales tax or out-of-state use tax
  • Customs fees
  • Freight and transportation fees
  • Site preparation costs (e.g. laboratory renovations)
  • Professional fees
  • Installation fees

 

Question #3: Where should warranties/maintenance agreements, training, and feasibility studies be budgeted?

These costs should be budgeted in the “other” direct costs category of the budget and are subject to F&A, unless otherwise stipulated by sponsor guidelines.

 

Question #4:  What is fabricated equipment?

Fabricated equipment is equipment that is constructed from individual parts by ASU and is identifiable as a discrete item (not a “project”). The equipment requires creative design effort by university faculty and cannot reasonably be built by an off-campus vendor (i.e., it is one-of-a-kind). It likely includes custom components, does not include modular equipment, and construction of the item is complex (e.g., not simply plugging various electrical components together). The finished item’s function does not bear resemblance to the functions of the individual components (e.g., an engine converts energy, a frame provides structure, and wheels reduce friction, but, a car provides transportation). Consumables or parts that are not an integral and permanent part of the system (e.g., oils, adhesives, etc.) cannot be included in the fabrication costs. These must be budgeted in “supplies”.

 

Question #5:  Can you give an example of a fabricated piece of equipment?

FLAME SYNTHESIS SYSTEM
Component Quantity Unit Cost Total Cost
Mass Flow Controller 1 6,045 6,045
Three-sided Steel Shelf 1 700 700
3 Prong Clamp 2 92 184
Clamp Holder 2 62 124
Support Stand w/rod 1 43 43
Single Zone Control console 1 686 686
Exhaust Hood 1 300 300
Glass Cylinder 1 500 500
Grand Total     8,582

Fabricated equipment is the sum total of all individual components.  These individual components become a single piece of equipment which relies on each and every component to work.  Individual components which comprise the the fabricated equipment should be budgeted under equipment.

 

Question #6: Are the funds budgeted in the equipment line subject to F&A?

If the F&A is based on MTDC, there are no F&A costs associated with this line.  However, F&A may be assessed if the base and/or sponsor’s guidelines are different.  For additional information, see the F&A link on the Proposal Information and Resources page.

 

Question #7: The project requires 10 laptops at $1,000 per unit.   Does this purchase qualify as capital equipment?

No.  The unit cost must be $5,000 or more.   The unit cost in this example is $1,000.  

 

Question #8: Where should these laptops be listed in the proposal budget?

Budget the laptops in the "supplies" line unless otherwise stipulated by the sponsor.

 

AT TIME OF AWARD

 

Question #1:  When the award comes in, what line should the fabricated equipment be paid from?

Code all individual components forming the fabricated equipment to Category 7810, Sub-object 46.  For information about the proper payment category for capital equipment and other budget items within the proposal, see the ASU expenditure code structure.

 

Question #2: When the award comes in, is there anything that must be done to track the equipment?

Yes, notification to property control is necessary to allow for tagging, annual tracking, and disposition of capital equipment.   See the Property Control FAQ for additional information.

 

Question #3: When a researcher leaves ASU, what are their responsibilities?

For ASU-owned research equipment being left at ASU

For equipment being relocated within the same unit, see PCS501.  For equipment transfers between two units, see PCS502.

For ASU-owned research equipment transferring to a new institution

See PCS1004-02.

For research equipment to be taken by retired or exiting employees

See PCS 1009.

 

Question #4: When a researcher transfers equipment to ASU from another institution, what are their responsibilities?

They must email Property Control immediately so the transfer can be properly recorded. This procedure is in PCS 207.

 

Question #5: What is required for ASU to accept in-kind equipment?

The donation of in-kind gifts of equipment (defined as $5,000 or more per individual unit) requires an appraisal or an estimate of the fair market value.  To begin the process of acceptance of the gift, contact Property-Q@asu.edu

See PCS-206

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