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Equipment Costs Information and Guidance

 

Definition

Equipment is defined by the University as an article of nonexpendable, tangible personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit.

Implementation of Change in the Capitalization Threshold for Equipment

Proposal budgets with projected expenditures for equipment items to be received on or after July 1, 2006 must budget for Facilities & Administrative (F&A) costs at the new threshold of $5,000. Since it may be difficult to forecast the beginning date of a project and delivery dates for purchased items, UC Irvine has established a cut-off date of October 1, 2005, after which all project proposals submitted must prepare budgets with equipment costs at the new threshold. Please note that F&A costs will be applied at the $5,000 threshold for all items received on or after July 1, 2006, without regard to the threshold used in preparing the project budget. Due to the recent change in the acquisition cost threshold, equipment ordered and received by UCI prior to July 1, 2006 will continue to be charged Facilities and Administrative (F&A) costs on equipment with an acquisition cost of $1,500 or above.

Estimating Equipment Costs

Estimate the cost of equipment using an appropriate cost estimation method such as vendor quotes or catalog prices. Make sure that sales tax, duty, transit insurance, freight, and installation charges are included in the estimated cost.

Generally, pharmaceutical sponsors of clinical trials will not allow the budgeting of equipment. Rather, some pharmaceutical sponsors will provide the equipment necessary to conduct the clinical trial with the expectation that the University will return the equipment after completing the trial.

Project Specific

All proposed equipment expenses must be project specific. Do not propose general purpose equipment such as office equipment (computers, typewriters, etc.), furnishings, air conditioners, refrigerators, freezers, etc. without clearly describing the project specific need for such equipment in the budget justification.

It is inappropriate for UCI to propose the use of University funds to support the acquisition of equipment on a project funded by a for-profit sponsor or to propose the use of funds provided by one sponsor to acquire equipment for a project supported by another sponsor.

Describing Equipment

To maximize flexibility in purchasing equipment, avoid describing equipment by product name, or referencing the maker of the equipment in either the budget or the budget justification. If it is impossible to describe proposed equipment without referencing the manufacturer, make, model number, etc. then provide this information and include the words "or equivalent" at the end of the description.

Fabricating Equipment

Investigators occasionally must create property that is not available elsewhere. Fabricated property items are created either for use by the sponsor or for use by the University. Standard items that are altered or customized to make them usable on a sponsored project do not qualify as fabricated property.

If equipment as defined above and > $5000 with more than a one year life will be fabricated during the course of the project, the costs of material components (even if the individual components do not meet the definition of equipment) are exempt from facilities and administrative costs (F&A) and should be listed as equipment costs. Fabricated equipment must be registered with Equipment Management in advance of initiation and the costs appropriately coded in accordance with UCI Administrative Policies and Procedures 706-15: Fabricated Equipment – Procedure in order to exempt the costs from F&A assessment.

Recharge costs or purchased services directly related to the fabrication of equipment are also exempt from F&A costs. However, the salaries, wages and benefits costs associated with equipment fabrication, and the costs of equipment maintenance agreements and equipment repair are not exempt and will be assessed F&A.

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