Property Management Policy & Procedure Manual
Section 200: Equipment Acquisition
Effective: 07/01/1996
Revised: 09/20/2018


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:

  1. Total finished value =>$5,000 with a useful life greater than one year.
  2. 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.
  3. Free standing, movable as an entire unit, not permanently attached to a structure, and will not lose its identity when relocated to other property.
  4. 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.
  5. 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.
  6. 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.
  7. 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.

Replacement parts:

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.]

Prototype fabrications:

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.


Responsible Party Action
Faculty Member & Department
  1. Prepare Fabricated Equipment Unit Pre-approval form and basic schematic diagram with an explanation of the integration of the parts.
  2. Present the completed, signed form and schematic diagram to Fixed Assets Property Management for review and approval.
    1. If the cost of the fabricated unit is part of a sponsored proposal, the approved form and schematic should be provided to the Office of Sponsored Research and Award Administration (OSRAA).
    2. If the fabricated unit is to be funded with Research Equipment Reserve Funds (RERF), the approved form and schematic must accompany the funding application to the Research Office for approval by the Research Council.
    3. If the fabricated unit is to be funded with other funding, the approved form is to be maintained at the department business office.
  3. Once funding is approved, Purchase Requests may be processed by the Business Center.
  4. Begin fabricating the unit. (Note: approval is required when using sponsored funds. On the grant index, look for a dollar amount budgeted as account code 40101 Equipment.)
    1. Process all vendor invoices using account code 40199 for all parts associated with the construction of the unit.
    2. External shop labor invoices should be processed using account code 24995 Construction Contract Services due to IRS 1099 reporting requirements for services received. After processing these invoices through Accounts Payable, complete a Journal Voucher (JV), with the appropriate text, to change the account code to 40199.
    3. If fabrication includes OSU shop labor, prepare a Journal Voucher (JV) to debit account 40199 on the funding source and credit account 79343 on the shop index.
  5. When fabrication is complete or on a quarterly basis (see PRO 202), whichever comes first, costs must be redistributed by JV from account code 40199 to account code 40101 so the asset record can be created. The text field of the JV must have the necessary information to create the asset record, including the original “I” doc numbers. The asset will be capitalized as a CIP (Construction in Progress) unless it is completed and in-use.
  6. If the asset is CIP, any additional costs in the new fiscal year should continue to be processed on account code 40199 and converted to account code 40101 or A80xx for an auxiliary or service center on a quarterly basis.
  7. When construction is complete and the asset is in use, process a final journal voucher to convert any remaining costs from account code 40199 to the equipment account code 40101 or A8011. Include the in-service date in the text of the JV. All modifications after the asset is placed in service must be expensed.
Fixed Assets Property Management
  1. Receives the Fabrication Equipment Unit Pre-approval form and basic schematic diagram from the faculty member/department.
  2. Reviews and returns the pre-approval form. Retains a copy for future reference.
  3. Approves Journal Vouchers which move costs from account code 40199 to account code 40101 or A80xx.
  4. At fiscal year-end, creates the capital inventory record as CIP until the unit is placed in-service or use.
  5. Issues a Bar Code Tag to the department for the fabricated unit.
  6. Requests a detailed update annually from the department for all assets that are still coded “CIP."