SUBJECT:

Increase in Equipment Capitalization Threshold to $5,000

After extensive consultation with the campuses, the University of California is increasing the capitalization threshold for equipment from $1,500 to $5,000. This will be a "phased implementation." The primary reasons for the change are (1) to reduce the administrative costs of recording and tracking items of equipment, and (2) to enhance overall stewardship and control of the University's assets by eliminating the requirement to record and track relatively low valued items, so more attention and effort can be given to safeguarding the remaining, higher valued items.

* Inventory Requirements -
Effective July 1, 2004 only those items above $5,000 will generally be required to be inventoried. This should substantially reduce the amount of time and resources that department administrative staff must spend performing this important function.

* Purchasing Equipment with Other than Extramural/Sponsored Funds -
Effective July 1, 2004 any equipment purchased with non-research funds having a value below $5,000 will be recorded as current period expense and will not be capitalized. A separate notice will be sent regarding changes in accounting for equipment.

* Purchasing Equipment with Extramural/Sponsored Funds -
Equipment items with a unit value equal to or greater than $1,500, but less than $5,000, for which payment has been made from July 1, 2004 and on or before June 30, 2006, will not be assessed overhead even though such amounts will be recorded as current period expense for accounting purposes. On or after July 1, 2006, such purchases will have overhead assessed. In order to ensure adequate funding, the budgets of any extramural proposals that have an anticipated end date later than December 31, 2005 should include an overhead budget associated with anticipated equipment purchases after that date for items with a unit value less than $5,000.

Please consult http://blink.ucsd.edu/go/equipmentchange for more information. Further detailed information regarding transaction processing and accounting requirements will be included in this Blink page in the near future.

If you have any additional questions, please contact Robert Forsythe, Supervisor of the Equipment Management Office, at x46286 or rforsythe@ucsd.edu.

Steven W. Relyea Vice Chancellor - Business Affairs Richard Attiyeh Vice Chancellor - Research