Equipment Costs Information and Guidance
- Definition
- Implementation of Change in the Capitalization Threshold for Equipment
- Estimating Equipment Costs
- Project Specific
- Describing Equipment
- Fabricating Equipment
Definition
Equipment is defined by the University as an article of non-expendable, tangible personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit.
Implementation of Change in the Capitalization Threshold for Equipment
Proposal budgets with projected expenditures for equipment items to be received on or after July 1, 2006 must budget for Facilities & Administrative (F&A) costs at the new threshold of $5,000. Since it may be difficult to forecast the beginning date of a project and delivery dates for purchased items, the Office of Research strongly recommends that all proposals submitted on or after January 1, 2006 use the new $5,000 threshold when estimating and budgeting equipment costs.
Estimating Equipment Costs
Estimate the cost of equipment using an appropriate cost estimation method such as vendor quotes or catalog prices. Make sure that sales tax, duty, transit insurance, freight, and installation charges are included in the estimated cost.
Project Specific
All proposed equipment expenses must be specific to the project (i.e., the proposed work could not be performed without acquiring and using the proposed equipment). Do not propose general purpose equipment such as office equipment (computers, typewriters, etc.), furnishings, air conditioners, refrigerators, freezers, etc. without clearly describing the project specific need for such equipment in the budget justification.
It is not appropriate for UCR to propose the use of University funds to support the acquisition of equipment on a project funded by a for-profit sponsor or to propose the use of funds provided by one sponsor to acquire equipment for a project supported by a for-profit sponsor.
Describing Equipment
To maximize flexibility in purchasing equipment, avoid describing equipment by product name, or referencing the maker of the equipment in either the budget or the budget justification. If it is impossible to describe proposed equipment without referencing the manufacturer, make, model number, etc. then provide this information and include the words "or equivalent" at the end of the description.
Fabricating Equipment
If equipment will be fabricated during the course of the project, the cost of material components (even if the cost of these components do not meet the definition of equipment) are exempt from facilities and administrative costs and should be listed as equipment costs. Recharge costs or purchased services directly related to the fabrication of equipment are also exempt from facilities and administrative costs. However, the salaries, wages and benefit costs associated with equipment fabrication are not exempt from facilities and administrative costs.