Office of the Vice President for
Administration and Finance
SECTION: FISCAL INDEX: B-8
SUBJECT: ACQUISITION OF CAPITAL EQUIPMENT
All capital equipment with an initial cost of $5000.00 or greater, regardless of its funding or acquisition source, is to be accounted for through inventory records maintained by the Property Manager, Facilities Department. When purchasing capital equipment, the department is responsible for using the proper accounts on the purchase requisition. The Property Manager will answer any questions as to whether a purchase should be classified as capital.
Capital equipment is acquired for the University through several sources. These include, but are not limited to:
- Purchase using any University fund source
- Equipment loans from federal, state and private agencies
The accounting system accounts 58600-58623 are use to identify capital equipment.
The department initiates a requisition in accordance with purchasing guidelines appropriate to the particular source of funds (i.e., state, grant/contract, etc.). The Purchasing Department issues the purchase order.
For the purposes of these procedures, "purchasing" may also refer to the procurement of goods via interdepartmental purchase from an on-campus service/auxiliary department. The Property Manager is notified of equipment purchases through copies of the purchase orders or other support made available by Accounts Payable.
Any capital equipment received by departments as gifts from outside donors is subject to inventory.
TITLE TO EQUIPMENT
Title to any equipment purchased by the University of Houston-Victoria is vested in the University and The State of Texas. Equipment purchased with sponsored project funds is also subject to sponsor regulations regarding title. Title to equipment transferred from another government agency or educational institution is vested in the University of Houston-Victoria and the State of Texas unless the former owner notifies the University in writing of other arrangements or conditions. Title to donated equipment is vested in the University of Houston-Victoria and the State of Texas by virtue of the fact that the University of Houston-Victoria is a state agency.
The University of Houston-Victoria is the sole agent to accept contracts and grants awarded to the University, and it is responsible for the disposal of any property furnished by those awards. Upon completion of a contract or grant, title to all property is transferred to the University immediately, unless the contract or grant requests title to remain with the sponsor or sponsor's designee.
When a department purchases non-maintenance, non-consumable items that enhance the functionality of existing equipment and increase the capital value, the purchase price of the item(s) is considered an "added cost" and capitalized. The modifications, attachments and/or accessories should be permanently installed with a combined value of the original equipment and added cost exceeding $5000 to qualify for added cost capitalization. If the combined value of the original item and the added cost do not exceed $5000, the added cost should not be capitalized.
It is possible that the original equipment did not qualify for capitalization when first purchased. When the modification causes the value to exceed $5000, the entire value (original and added cost) should be capitalized, per the State Auditor's Office. For this reason the following information applies for all "added cost" purchases:
Purchase requisitions must include the following information about the original item when added cost qualifies for capitalization:
- University of Houston-Victoria inventory tag number of original item
- Payment voucher number on original item (optional, if available)
The words "Added Cost to:" should be written before listing this information.
Failure to provide the above information may delay the purchase process for the needed modifications, attachments or accessories. If a department has any questions concerning capitalization of equipment, use of capital equipment accounts or the purchase of added cost items, please contact the Property Manager in the Facilities Services Department.
Signature Obtained 03/02/2009
Tim Hudson, Ph.D. Date
Next review date: January 2011
Origination: Finance Department
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