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Purchased Equipment
Fabricated Equipment
General Purpose Equipment
Split-Funded Equipment
Distinguishing Between Capital Equipment and Repair/Maintenance

Purchased Equipment

Many sponsors allow for the purchase of capital equipment. The purchase and use of such equipment must follow both sponsor and University of Arizona guidelines and policy.

Capital equipment is defined in the University of Arizona’s Property Management Manual as an item of non-expendable, tangible, personal property, which:

  • Has an aggregate acquisition cost or fair market value of $5,000 or more
  • Is free standing, movable
  • Is complete in itself
  • Does not lose its identity when affixed to or installed in other property
  • Has a useful life greater than one year

(Property Management Manual; Section 2.10 Capitalization of Tangible Assets)

Before including equipment in your budget, you should assure that it is:

  • Necessary for the successful completion of the project
  • Allowable under the sponsor’s guidelines
  • Allocable to the particular project
  • Similar equipment available for use on the project does not already exist at the University of Arizona (See the Core Facilities page for information on available resources).

When creating your budget:

  • The equipment items should be listed in the budget by name
  • The estimated cost must be based on written quotations or catalog prices
  • The budget justification should include an explanation of how the equipment will be used on the project and by whom, particularly for general use equipment
  • Shipping, sales tax, and installation costs are included as part of the equipment cost
  • Ongoing maintenance and services costs should be included in the grant budget
  • Facilities & Administrative costs are not charged on equipment costs that meet the capital definition

Equipment must be purchased in accordance with University of Arizona purchasing policies.

Fabricated Equipment

The activity of a project may consist partially or entirely of fabrication of equipment. Fabricated equipment is a unique stand-alone piece of equipment constructed from individual parts that requires creative design effort by University personnel and cannot reasonably be purchased “off the shelf” from a vendor or commercial supplier (i.e., it is one-of-a-kind).   Fabrication is distinguished by one or more of the following (Property Management Manual; Section 5.00):

  • Creative effort in the design: If creative effort on the part of the University faculty is necessary for the completion of the design specification of the equipment, and if the equipment cannot reasonably be built by an off-campus vendor.
  • Change in the name of the equipment: If the component parts of the finished equipment bear no relationship in name to the finished equipment, the activity should be considered fabrication. For example, a Time Machine is a piece of Fabricated Equipment consisting of many parts expertly fitted together thus creating an item that cannot be readily purchased.
  • Complexity of construction: If the construction is complex, the activity is fabrication.

Even though the end product is classified as capital, the following costs comprising the fabricated equipment should be charged to the appropriate expenditure category for the cost:

  • Department Labor
  • Payroll Expenses
  • Production Equipment
  • Documentation
  • Repair or maintenance expense
  • Administrative support
  • Enhancements that are not integrated into the equipment
  • Travel

The following expenses are included in calculating the value of a Fabrication, and the sum should be budgeted on the capital line item when the total of these costs is $5,000 or more:

  • Raw materials and parts to be affixed to the equipment. Quantities of goods acquired must be reasonable and directly allocable to the specific fabrication.
  • Reasonable start-up supplies and parts to be incorporated in or otherwise consumed in the research and development of the fabrication
  • Shipping and handling
  • Third party installation charges from outside vendors or authorized internal service centers

A supplementary budget should be included with the proposal to support the estimated total cost of the Fabricated equipment.

Cost Accounting for Fabricated Equipment

Property Management Manual, Section 5.10 provides direction on the cost accounting for the purchase of equipment and fabrication of complex equipment.

General Purpose Equipment

General-purpose equipment is defined in 2 CFR §200.48 as equipment, which is not limited to research, medical, scientific or other technical activities. Examples include office equipment and furnishings, modular offices, telephone networks, information technology equipment and systems, air conditioning equipment, reproduction and printing equipment, and motor vehicles.

General purpose equipment generally cannot be charged to your research project, unless it will be used primarily or exclusively for the research project. You must receive prior approval from your sponsor to purchase such equipment. Appropriate documentation of sponsor approval would be a line item in the approved (awarded) budget, a detailed description of the equipment and its purpose in the budget justification for the approved budget, or a letter of approval from the grants officer.

For sponsored projects awarded under the Federal Demonstration Project (FDP), general purpose equipment may be charged to the project if it will primarily be used in the actual conduct of the research. (FDP General Conditions, Section 27(a)(ii)). Include a detailed description of the use of the general purpose equipment in your budget justification.  Contact Sponsored Project Services for assistance when budgeting for general purpose equipment.

Screening Prior to Purchase

The National Aeronautics and Space Administration (NASA) and the Jet Propulsion Laboratory (JPL) screen the acquisition need against property held in government warehouses. NASA and Jet Propulsion Laboratory (JPL) contracts (not grants) have a requirement that prior to acquisition of any item of equipment with an expense of $1,000 or more that the form DD-1419 be submitted to the sponsor’s contracting officer. NASA and JPL have a maximum of 30 days to complete the review before the University can proceed with acquisition of all commercially available equipment items, except computer hardware. There is no maximum review time on data processing equipment.

The Department of Defense has the same review requirement for the purchase of equipment, but their minimum threshold for review and submission of Form DD-1419 is $50,000 or more.

When required by the Federal Government sponsor for equipment acquisition, the principal investigator must submit Form DD-1419 through the Property Administrator in Sponsored Projects & Contracting Services. The Property Administrator issues a control number and retains a copy for the contract’s property audit file. The principal investigator must include time for the sponsor to process the Form DD-1419 when scheduling the acquisition of project equipment.

Please contact the Property Administrator in Sponsored Projects Services with questions or for additional information. 

Split-Funded Equipment Purchases

Split-funding is the purchase of a capital equipment item using funds from two or more sources and/or sponsors.  The Sponsored Projects Services Property Administrator reviews these purchases for a possible conflict in title-holder. The principal investigator is urged to avoid shared funding of equipment from projects with different title-holders, i.e., federal vs. University, Department of Energy vs. NASA. The Property Administrator will contact the principal investigator when a conflict arises.

Distinguishing between Capital Equipment and Repair/Maintenance

If the expenditure restores the asset to its original condition, it should be classified as a repair and maintenance expenditure and charged to operations, e.g., a new mirror for an existing telescope. Expenditures for parts or improvements to existing capital are considered capital if the improvement adds to the (original) estimated purpose or capacity of the item. The Financial Services Office Property Management Manual defines and details cost accounting procedures for Maintenance and for Capitalization.

Generally, if the purchase of equipment or other capital items is specifically authorized under a sponsored agreement, the amounts authorized for such purchases are assignable to the sponsored agreement regardless of the use that may subsequently be made of the equipment or other capital items involved.

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