Equipment Capitalization Help

Updated

Capitalization Policy Statement

Bigelow requires that amounts expended for facilities and equipment (in excess of certain thresholds and whether purchased, constructed or leased) be capitalized, and depreciated. Capitalized amounts should be periodically inventoried for impairment or possible write-off in accordance with Generally Accepted Accounting Principles (GAAP) and regulatory requirements.

Criteria:  An item shall be capitalized if:

a. The total cost is $10,000 or more after July 1, 2025. Previous threshold was $5000. Budget accordingly.

b. The equipment has a useful life of more than one year. 

Items to be capitalized:

  1. Equipment and Furniture are capitalized if the per-unit cost of the asset exceeds $10,000 and the asset has a useful life in excess of one year. 
    1. Costs for fabricated equipment may be capitalized if the total costs of parts, supplies, shipping and installation costs are greater than or equal to the capitalization threshold and useful life criteria. These costs should be explained and referenced on a single Purchase Order.
  2. Key factors when deciding when to capitalize a service agreement related to a existing fixed asset (equipment/instrument); generally all factors should be met.
    1. Cost of service agreement – if the cost is substantial compared to the equipment price it may be considered for capitalization
    2. Length of the contract – A long-term service contract is more likely to be capitalized v. an annual one.
    3. Functionality impact: If the service contract is crucial for the equipment to operate properly or significantly enhances its capabilities, it is a candidate for capitalization
  3. Examples: 
    1. High-tech machinery with complex software updates: If advanced instrumentation requires frequent software updates from the vendor to function properly, the associated service agreement could be capitalized.
    2. Critical equipment with required preventative maintenance: If specialized equipment needs regular, mandatory servicing by the manufacturer to ensure functions, the service contract could be capitalized.
    3. Regular maintenance vs. essential service: Routine maintenance contracts are typically expensed as operating costs, while a service agreement that is essential for the equipment to function properly is more likely to be capitalized.

If you need to take any science equipment off campus temporarily for your research, please notify the Director of Finance (Cindy) and the Vice President for Admin and Ops (Jim) so the institution can review if we need updates to our insurance policy, as equipment is institution property and part of our capitalized assets that are insured. This also serves to notify the institution of intent to take institutional property off-campus, so we can try to help track its return. This refers to any equipment over $5k purchased before July 1, 2025, and over $10k purchased since July 1 2025. Unauthorized removal of the institution’s equipment could be considered theft of the institution’s property.

Our research vessels (i.e. the Bowditch and small boats) are considered extensions of our campus, so you don’t need to notify us about equipment you are taking ON the vessels, but if you are going to put equipment overboard and/or into the water, please make sure that the business office knows (i.e if you are deploying a mooring or sensor package that contains our equipment, which might be lost forever...).


Still need help? Submit a ticket.

Creating a Bill to be Paid

Expense Report

Powered by HelpDocs (opens in a new tab)