* This information replaces PRO 210 Equipment Fabrications
PRO 210: Equipment Fabrications
Per definition, Fabricated Equipment is scientific or other complex equipment comprised of a number of individual components that are fabricated/built into a single functional unit. The following criteria must be met:
- Total finished value =>$5,000 with a useful life greater than one year.
- The ownership or title-to code must be the same for the entire fabricated unit. Funding sources cannot be mixed so part of the fabricated unit is owned by the Federal Government or another outside entity and the remaining part(s) is owned by the university.
- Free standing, movable as an entire unit, not permanently attached to a structure, and will not lose its identity when relocated to other property.
- Unit must be complete in itself. It will be added to, accounted for, and removed from capital inventory as one single asset. All pieces stay together until the entire unit is sent to Surplus Property or disposed per section PRO 800 Equipment Disposal.
- Assembled parts must be integrated, permanently attached to each other, and essential in the performance of the unit. A basic schematic diagram with a description must show how the parts are integral to the unit.
- A fabricated unit with all assembled parts must be physically found in one location at all times. Parts which do not meet this requirement are considered individually for capitalization.
- Individual components cannot be used independently of the fabricated equipment and cannot function separately apart from the fabricated unit to which it is attached.
Fabricated, assembled or constructed equipment that meets the above definition will be capitalized and added to the equipment inventory. The faculty member and department will be responsible for pre-approval prior to purchasing of any parts or items for the fabricated unit. This includes a basic schematic diagram of the proposed fabricated unit with explanations of the integration of the parts.
Costs to assemble or fabricate can include parts, shipping costs, and labor of an organized shop. Faculty time may not be included. Donated parts will be recorded at fair market value.
Network and communication wiring cannot be capitalized as equipment. This is infrastructure and special rules apply. Contact Fixed Assets Property Management - Financial Accounting & Analysis (FA&A), if you have questions concerning these costs.
Software that is leased or licensed for use and which is separately itemized on a vendor invoice cannot be capitalized. Do not include this expense in a fabricated unit cost.
What is not Fabricated Equipment?
- Standard items that are altered or customized to make them usable on a sponsored project do not qualify as fabricated equipment.
- Connecting components together in a system (physically or virtually) does not constitute an equipment fabrication (e.g. when individual computers and servers are joined to create a network).
- Components greater that $5,000 which are not physically attached or can function independently should be considered stand-alone capital equipment. These items that are less than $5,000 should be expensed.
If audited, departments must be able to justify the capitalization of fabricated equipment.
Once a fabricated unit has been initially completed and placed in service, all replacement items, parts, or pieces to upgrade or enhance the unit will be expensed.
Example: a battery is replaced with a more powerful battery. The new battery must be purchased as an expense using Account Code “23501 Equipment Maintenance & Repairs”. [Note: the value of the original battery remains and depreciates as part of the fabricated unit.]
OSU may receive grant or contract funding to assemble and test a specialized piece of equipment which has not been previously constructed. These prototype units are unique experimental pieces of scientific equipment which are designed for a specific purpose. There is a testing period for these types of fabrications. If the title to the equipment will remain with OSU, an asset number is set up for this type of equipment at the end of the first fiscal quarter of construction and the asset is listed as a work-in-progress (WIP). The unit should not be coded as “in-use” until the testing period is completed or the end date of the grant/contract; whichever comes first. If the item is found to be non-functional after the testing period, it must be removed from inventory.
REMOVAL OF A FABRICATED UNIT FROM FIXED ASSET INVENTORY:
When a fabricated unit is no longer in-service as it was designed and the department wants to surplus the parts or use some of them for another purpose the asset record must be removed from the fixed asset inventory and any remaining depreciation expensed to the university. These parts cannot be added back to inventory as a single asset or part of a newly fabricated unit.