99-5 Obsolete

Capitalization Threshold Change
June 4, 1999

Effective July 1, 1999, the threshold amount for the capitalization of equipment will be raised from $1,000 to $5,000. This is the result of the federal government’s allowing universities to raise their capitalization threshold, and a detailed analysis by Indiana University to determine the optimum threshold for our institution. Because the current F&A (Indirect Cost) rates are set through June 30, 2002, equipment will be treated as follows in the three-year interim period:

The capitalization threshold will increase to $5,000 as of 7/1/99 for tagging and entering assets into the Capital Asset Management system.

Equipment should continue to be budgeted at the $1,000 threshold (with no F&A costs) on external proposals through the period of the current F&A agreement, June 30, 2002. If a proposal is prepared that requests funds for budget periods after June 30, 2002, equipment should be budgeted at the $5,000 threshold (items less than $5,000 will be assessed F&A costs).

Contract & Grant Administration will continue to report items purchased between $1,000 and $4,999.99 as equipment on financial reports submitted to sponsoring agencies through 6/30/02.

During the interim period (present through 6/30/02), F&A costs will not be charged on equipment purchased between $1,000 and $4,999.99.

These changes necessitate that the current object code classification of items under $5,000 follow the table below.

Cost	Object Code	Description	F&A Cost Applied
$0 – 999.99	4616	Computer Software < $1,000	YES
	4910	Expendable Equipment <$1,000	YES
	4908	Expendable Computer Equipment < $1,000	YES
$1,000 – 4999.99	5202	Non-capital Equipment	NO
	5217	Non-capital Computer Equipment	NO
	5218	Non-capital Software	NO
$5,000 or >	7XXX	appropriate capital object	NO
Discontinue use as of 7/1/99 on new purchases	5200	Expendable Equipment (prior to FY 2000)	YES
	5215	Expendable Computer Equipment (prior to FY 2000)	YES