Equipment that is constructed by combining or assembling modular components and/or materials into one identifiable unit is referred to as fabricated equipment. When completed, each component loses its individual identity and the end product becomes an identifiable single unit. Typically such equipment is made or designed in-house for a specific purpose. In order to be capitalized, the finished product must have a unit cost of $5,000.00 or more and a life expectancy of more than one year.
- University labor costs related to equipment fabrication by an approved recharge center qualify for inclusion in the capitalized cost. All other University labor costs are not allowed to be capitalized as a part of the fabricated project.
- The purchase price on individual components does not have to exceed $5,000.00, as long as the total combined price of the end product is equal to or greater than $5,000.00. If a fabricated project is approved, then the individual items must be purchased using a fabricated equipment account in the range of 61100 – 61119.
- Repair of existing equipment, regardless of the cost, is not fabricated and is subject to F & A costs.
- If there is an upgrade of existing equipment, which result in the existing equipment implementing new technologies (not just an upgrade or repair of existing technology) and the total of the components of the upgrade are greater than $5,000.00, then the purchase of the components are not subject to F & A costs.
Prior to beginning a fabrication project, departments are required to complete and have approved a Notice of Intent to Fabricate form. The form must be approved by Property Accounting before purchases can be made. When a fabrication project is approved, a copy of the approval will be sent to the department, with identification of the asset number assigned to the project. Departments cannot begin ordering items for a fabrication project until they have received the approval form, including the asset number.
When approved, all purchases for fabrication projects should be charged to an account within the range of 61100 – 61119. The fact that a specific purchase is for an approved fabrication project should be indicated on the purchasing documents used, i.e., Purchase Requisitions, Campus Orders , etc. The approved asset number must be indicated on all purchasing documents. The Purchasing Department will not process documents charged to the account number range 61100 – 61119 without the assigned asset number. A copy of the purchasing document should be sent to Property Accounting at the time it is created.
At the conclusion of the project, the department should advise Property Accounting that there will be no further purchases. Property Accounting will then prepare a list of all component purchases on the project and send it to the department with the asset number attached. Any discrepancies will be the department’s responsibility to correct.