Subject:  Capitalization Threshold Change No.        02-1
Date:    January 2, 2002

(Note:  This Important Notice is being sent to Account Managers, Chairpersons, Deans and Chancellors.  Please forward to others who have a need to know.)

As previously announced in Important Notice 99-6 (June 1999), effective July 1, 2002 the threshold amount for the capitalization of equipment will be raised from $1,000 to $5,000.  The federal government has allowed universities to raise their capitalization threshold and a detailed analysis by Indiana University has determined $5,000 to be the optimum threshold for our institution.  

§         The capitalization threshold will change to $5,000 effective July 1, 2002 for tagging and creating assets in the Capital Asset Management System. 

§         Proposals prepared that request equipment funds for budget periods after June 30, 2002 should include equipment at the $5,000 per item threshold.   

Effective July 1, 2002 please use the appropriate financial object code as follows when coding equipment purchases and cost transfers: 

Cost

Object Code

Description

F&A Cost Applied

$0.00 - 4,999.00

4616

Computer Software

YES

 

5200

Expendable Equipment

YES

 

5215

Expendable Computer Equipment

YES

$5,000.00

7XXX

use  appropriate  capital  object  code

NO

Financial reports submitted by Contract and Grant Administration to sponsoring agencies will report capital items costing between $1,000.00 and $4,999.99 as equipment when purchased and paid for by June 30, 2002.  Facilities and Administrative (F&A) costs will not be charged.  Reports after June 30, 2002 will reflect the new $5,000 threshold and items less than $5,000 will be assessed F&A costs. 

Please Note:  To accommodate equipment orders experiencing unexpected vendor delays extending past June 30, 2002, the following procedure is suggested.  If a Purchase Order for equipment is in effect on April 30, 2002 and if the Account Manager and RC Manager agree, the F&A costs generated after June 30, 2002 will be moved to a cost share sub account to be spent on project costs at the Account Manager’s discretion.  Reports will be run monthly by Contract and Grant Administration to assist in determining those accounts subject to this procedure.  Transactions must be completed by June 30, 2003. 

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Financial Management Services Phone:  (812) 855-4884 Email:  cgadmin@indiana.edu
Research and Sponsored Programs - Indianapolis Phone:  (317) 274-8285 Email:  rspinfo@iupui.edu
Sponsored Research Services - Bloomington Phone:  (812) 855-0516 Email:  resdev@indiana.edu
Research and University Graduate School Phone:  (812) 855-3963 Email:  stemarti@indiana.edu