Equipment

Definition
Difference between University and Recharge and Cost Center Threshold
Acquiring Equipment
Restrictions on Recovering Cost of Federally Funded Equipment
Recovering Equipment Cost
Depreciation vs. Use Allowance
Schedules
Equipment Journal Vouchers
Equipment Disposal
Forms/Templates

Definition

For recharge and cost centers, equipment is considered depreciable if:

The useful life is longer than 1 year, and
It is used in recharge center activities, and
The cost is equal to or greater than $5,000 per individual equipment tag number. Cost includes calibration, installation, freight, trade-in, and sales & excise tax.

Difference between University and Recharge and Cost Center Threshold

The equipment threshold is $5,000 for recharge and cost centers but $2,000 for the rest of the University. Equipment costing between $2,000 and $5,000 will be coded in a 06-XX object code in the University's financial system. This means recharge and cost centers can purchase equipment costing less than $5,000 on their operating budget. Centers can depreciate only equipment costing $5,000 or more.

Acquiring Equipment

The acquisition cost of equipment is determined using the University's equipment policy as described in Administrative Policy Statement 61.2.

There are several ways depreciable equipment used for recharge center activities can be acquired:

Depreciable equipment is typically purchased from the equipment reserve budgets of the recharge or cost center.
Depreciable equipment acquired with federal grant funds may be turned over to the recharge or cost center after the equipment has served the purposes of the grant, provided title is given to the University. See restrictions on recovering cost of federally funded equipment for more information.
Depreciable equipment may be leased. The terms of the lease will determine whether it is a capital lease or an operating lease. Refer to the lease page for more information.
Depreciable equipment may be donated to the University and used by the recharge or cost center.
Designated university-wide recharge centers may request central University funds to acquire depreciable equipment.
Depreciable equipment for recharge centers may be purchased by a department using non-federal funds. The department can recover the cost of the purchased equipment by receiving services without charge or charging departmental equipment to the recharge center equipment reserve account up to the cost of equipment, with prior MAA approval.

* Depreciable equipment MAY NOT be purchased on the operating account.

Restrictions on Recovering Cost of Federally Funded Equipment

The portion of equipment funded by federal grants & contracts cannot be recovered in the rates to federal users. Federally-funded equipment can be used in recharge center operations if the University has title to the equipment and the grant that paid for the equipment has expired. If the center has federally-funded equipment it would like to include in rates to non-federal or non-UW users, please contact MAA.

Recovering Equipment Cost

Equipment costing $5,000 or more per item and purchased on non-federal budgets cannot be included in full in the rates in the year of purchase. The cost is recovered by including depreciation or use allowance in the rates over a period of time.

Depreciation = (Acquisition Cost - Residual Value) / Useful Life

Use Allowance = Acquisition Cost * 6.67%

For a definition of the terms used in the calculation of each method of recovering the equipment cost, click on the term.

Note: Interest costs on capital leases cannot be included in rates to federal users and depreciated. The center should not include interest cost in the acquisition of equipment.

Including depreciation or use allowance of an individual piece of equipment is optional. For each equipment class, the center can elect to use either depreciation or use allowance, but not both methods.

The equipment class code is the first two digits of the "Class Code" field in OASIS (authorization required).

Depreciation vs. Use Allowance

	Depreciation	Use Allowance
Quicker method to recover cost	Yes	No
Residual value of equipment used	Yes	No
Useful life used in calculation	Yes	No
Can method be used if equipment is no longer in use	No	No
Can method be used once useful life is over	No	Yes

Schedules

If depreciation or use allowance is included in the rates, the center needs to include a schedule which details the following information for each piece of equipment included in the rates.

Type of equipment
Tag number in OASIS (authorization required)
Total cost of equipment
Budget numbers funding equipment cost
Cost that is being depreciated
Useful life (depreciation only)
Annual depreciation or use allowance amount
Date depreciation begins (depreciation only)
Date depreciation end (depreciation only)
Use allowance taken to date (use allowance only)

MAA reviews & approves the schedule when it is submitted. An updated depreciation or use allowance schedule can be submitted at any time during the year. Since equipment must be listed on the schedule to include depreciation in the rates, most centers update their schedule with their annual rate proposal.

Equipment Journal Vouchers

After an equipment schedule has been approved, the center prepares a journal voucher (JV) at the end of each calendar quarter to transfer the quarterly depreciation or use allowance from the operating budget to the equipment reserve budget.

The depreciation or use allowance JV includes the following codes:

	Budget	Object Code	Amount
Debit	Operating Account	15-01-00	Quarterly amount
Credit	Equipment Reserve	15-01-00	Quarterly amount

JVs should be submitted to MAA a month after the end of the calendar quarter.

January - March	Due by April 30
April - June	Due by July 31
July - September	Due by October 31
October - December	Due by January 31

Equipment Disposal

Record the proceeds (if any) from the sale of the equipment in the equipment reserve budget. There is no impact upon the operating budget.

Any gain or loss on the sale of equipment is recognized in the equipment reserve budget.

Remove equipment from the depreciation/use allowance schedule and stop include depreciation or use allowance in the rates once the equipment is no longer used by the center.

Forms/Templates

Depreciation & Use Allowance Schedule Template
Journal Voucher Template

Procedures

Resources