Overview: Buying and Accounting for Capital Equipment

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Definitions and Types of Capital Equipment


Capital Equipment

Capital equipment is also referred to as property or capital assets.

At Stanford, a capital asset, or piece of capital equipment or property, is defined as having all of the following characteristics:

  • An acquisition cost of $5,000 or more
    • Note:  Prior to 9/1/2003 the threshold was $1,500.
  • A useful life of more than one year
  • Is a stand-alone, moveable item

Bulk Equipment

When large quantities of equipment are acquired, the equipment is also considered a capital asset. The “bulk” purchasing process must be used when all the following criteria exist:

  • The equipment will be Stanford-owned at time of purchase and is not being charged to a sponsored project
  • a quantity of 25 or more identical items are being purchased
  • the individual cost for each item is $400 or more
  • the total cost of the purchase is $10,000 or greater

Fabricated Equipment

Fabrications are created by assembling a number of components (manufactured or custom made) to produce a specialized piece of equipment that meets unique research specifications.

An equipment fabrication must meet all of the following criteria:

  • Be a unique, one of a kind item, fabricated by Stanford
  • The aggregate cost of materials, supplies, and components must be $5,000 or greater and is included as part of the acquisition cost for the completed asset
  • The cost of associated labor is included as part of the acquisition cost reported for the completed asset
  • Upon completion, have a useful life of more than one (1) year or, if on a NASA contract, two (2) years

Most fabrications are sponsor-funded and therefore have a number of compliance requirements that require special accounting treatment. For additional details, contact your Property Service Representative within the Property Management Office. See http://ora.stanford.edu/ora/pmo/psr/default.asp.

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Key Roles and Responsibilities


Property Management Office (PMO) within the Office of Research Administration develops and implements policies and procedures within a system that enables effective property management for the University. PMO’s responsibilities also include financial reconciliation, sponsor property reporting, training, conducting the physical inventory, and maintaining the official property records.

Department Property Administrators (DPAs) establish and maintain property records for their assigned areas. The DPAs provide guidance to department personnel concerning property matters such as acquisition, coordination of transfers, equipment custody, and equipment at sub recipient locations, maintenance, physical inventory, and disposal. DPAs are their schools' liaison with PMO on property related issues. To identify your local DPA, use the DPA Lookup Tool.

Asset Custodians are Stanford employees responsible for a designated group of assets. Asset Users are the individuals who use the equipment on a regular basis. A custodian may also be an asset user. Asset custodians and asset users are responsible for providing accurate, timely, and complete information to their DPAs regarding property status and use, and must maintain assets in a responsible manner, including taking precautions to discourage loss, damage and theft of the assets.

PMO’s Property Manual further discusses these and other roles and responsibilities: http://ora.stanford.edu/ora/pmo/manual/default.asp.

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Acquiring and Disposing of Capital Equipment


Acquiring Capital Equipment

Purchasing is the most common method of acquiring property at Stanford University. Requisitions for property are placed online, using the iProcurement application within Oracle Financials. (See Quick Steps: Create or Change a Standard Purchase Requisition (STD), which includes requesting purchase of capital equipment.) Purchase requisitions are routed by the requester for approval, orders are placed by Procurement, and receiving of the property is recorded in iProcurement by designated departmental personnel. Capital equipment purchase requisitions require DPA approval. The requestor must use either the Standard Capital Equipment or the RPO Fabrication requisition categories. PCARD use is not allowed. Timely receiving for capital equipment is required and can be done using Oracle iProcurement.

Most capital equipment purchases made by Stanford are subject to pre-purchase screening by DPAs to avoid acquiring duplicative items. In addition, if sponsored funds are used to purchase property, there may be other pre-purchase considerations, such as approval to purchase, or on federal contracts, pre-purchase screening requirements within the sponsoring agency. Specific requirements are identified in within each sponsored project agreement. Chapter 2 of the Property Manual explains additional information about screening.

Recording Capital Equipment

A PTAE (Project, Task, Award and Expenditure Type) is selected when the capital equipment is initially purchased. Common expenditure types for capital equipment can be found at http://ora.stanford.edu/supporting_files/cap_exp_types.xls.

Other Methods of Acquiring Capital Equipment

Other methods of acquiring capital equipment include donations, incoming transfers, loans, capital leases, and sponsor-furnished property. Chapter 2 of the Property Manual explains the other methods of acquiring capital equipment: http://ora.stanford.edu/ora/pmo/manual/chapter_02/default.asp.

Disposing of Capital Equipment

Equipment no longer needed by its owning department is a candidate for re-use within Stanford University. Re-use within Stanford is the top priority before an asset is processed for disposal. Resources related to disposal of equipment (both capital and non-capital) at Stanford University and reuse of equipment are available the Property Management web site at http://ora.stanford.edu/ora/pmo/manual/chapter_09/default.asp.

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Accounting For Capital Equipment


Financial Systems

The following systems, working in conjunction with each other, make up the “official” property record:

  • Sunflower Assets (SFA): Used by DPAs and PMO to create and maintain asset records for the accountability, tracking, physical inventory and disposal of property
  • Grants Accounting (GA): Used by DPAs and PMO to track fabrications while they are still work in process
  • Oracle Fixed Assets (OFA): Used by Controller's Office staff to calculate and track Equipment Depreciation and University Accounting
  • PMO Material Tracking System: Used by DPAs and PMO to create and maintain records for the accountability, tracking, physical inventory and disposal of government owned material

All capital and sponsor-owned property (except material which is tracked in the PMO Material Tracking System) must be recorded and tracked in SFA. The entry of the receiving transaction in the iPO system initiates a flow of data into the Sunflower Assets PO Interface from which the Department Property Administrator (DPA) can subsequently create an asset record.

Departments are also encouraged to use SFA as a single repository for all other property they manage, such as sensitive property, and other non-capital items the department chooses to track. Having a single record facilitates reporting, eliminates redundant and duplicate record entry into unofficial shadow systems, and enables the tracking of purchase trends within a department. It can also help maximize reutilization to avoid unnecessary purchases, and be used as a tool for replacement planning.

Reclassifying or Transferring Capital Equipment Expenditures

Sometimes the P,T,A, and/or E initially selected may be incorrect or may need to be changed. Per Administrative Guide Memo 38, reallocation of charges must be accompanied by documentation justifying the change, and such documentation must be received from an authorized financial administrator for the account(s) (PTA) being debited. For capital expenditures, this transfer is done in the core Oracle Financial application by Controller's Office staff. Specific instructions for requesting transfers are available at http://ora.stanford.edu/supporting_files/ptae_change_template.doc, and the applicable form is available at http://ora.stanford.edu/supporting_files/ptae_change_template_inst.doc.

Capital Expenditures on Expenditure and Fund Reports

The treatment of capital assets in the University’s expenditure and fund reports is explained in the job aid at https://docushare.stanford.edu/dsweb/Get/Document-37309/Cap_on_Exp_and_Fund_Reps.doc.

Additional information on procedures and policies related to Capital equipment can be found at http://ora.stanford.edu/ora/pmo/manual/default.asp.

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