Capital Equipment & Amortization

LAST UPDATED: February 21, 2011

What You Should Know

Capital equipment is defined as an item of tangible personal property with a cost of $5,000 or more and a useful life of more than one year.

Capital Equipment Coding

Capital equipment may be charged to fund 80, 20, or sponsored award (fund 40/60) project grants. Equipment purchases supported by general funds appropriations are charged to fund 80 project grants (81XX if amortized; 80XX if purchased outright).

Equipment purchases using appropriately restricted gift, endowment, start up, or other non-sponsored funds are charged to fund 20 project grants. Equipment budgeted and approved on a sponsored award should, whenever possible, be purchased against the relevant fund 40 or 60 project grant, not charged to departmental funds then transferred. For guidance on the correct account code to be used when booking the purchase, see the Account Code Primer.

For more information about capital equipment budgeting, please contact the capital budget department, part of asset administration.

Amortization

Amortizing an item of equipment allows its cost to be spread to a department’s operating budget over several fiscal years. The expense is amortized over the equipment’s useful life, which varies depending on the type of equipment.

Principal and interest are charged annually to an operating budget project grant, usually specifically designated for this purpose. The interest rate charged reflects the rate that the University incurred in its regular borrowings for capital expenditures for the year in which the equipment was purchased. In order to amortize an item of equipment, specify a DDD81XX project grant on the purchase order. You also will need to provide the controller’s office with the operating project grant that will pay the principal and interest.

For more information about amortization, please contact the controller’s office.


 

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