Fabricated Equipment

Fabricated equipment is defined as scientific or other complex equipment comprised of several individual components that are fabricated/built into a single functional unit. Fabricated equipment is capitalized as a single asset for a combined total cost more than $5,000 and a useful life greater than one year. Typically, the components of fabricated equipment are purchased by separate transactions and may be from multiple vendors.  All components must function as a singular unit and will be collectively disposed of at the end of the useful life of the equipment. Individual components cannot be used independently of the remaining pieces of fabricated equipment and cannot function separately apart from the fabricated unit to which it is attached.

Fabricated equipment is not:

  • Standard items that are altered or customized to make them usable on a sponsored project.
  • Components connected together in a system (physically or virtually), e.g., when individual computers and servers are joined to create a network.
  • Components valued greater than $5,000 that are not physically attached or can function independently. These should be considered stand-alone capital equipment. Components that are less than $5,000 should be expensed.
  • A sponsored project that is for the purpose of constructing experimental equipment.

If audited, departments must be able to justify the capitalization of fabricated equipment.

NOTE: If a computer is purchased because it is required to run complex scientific equipment and the fabricated equipment cannot function without it, the computer can be capitalized as part of the fabricated equipment. However, the computer MUST be used strictly for that fabricated equipment and cannot be used in any other capacity.

For more detail on the definition of fabricated equipment, see the University of Nebraska Capitalization policy.

 

Evaluation and Capitalization Procedures

Purpose and Roles

Purpose:

The purpose of this procedure is to ensure that fabricated equipment is properly identified and capitalized.

Fabricated equipment capitalization will not be applied retroactively. The form must be submitted and approved prior to components being ordered.  Otherwise, individual equipment greater than $5,000 will be capitalized individually and items less than $5,000 will be expensed. 

Roles

People involved in this procedure:

  • Principal Investigator
  • Departmental business contact person
  • UNL Accounting
  • Sponsored Programs

Before Purchasing Fabricated Equipment

Before purchasing equipment:

  1. Principal Investigator (PI), in conjunction with the departmental business professional, should notify Accounting to establish new fabricated equipment by completing the following Fabricated Equipment Approval Form when the grant has been awarded or funding determined. If available, provide a diagram or visualization of the fabricated equipment. Completed forms should be sent to Fixedassets@unl.edu. 
  2. A fixed asset accountant from UNL Accounting evaluates information provided by the PI/contact person on the Fabricated Equipment Approval form and contacts the PI/contact person to determine if the equipment qualifies as fabricated equipment that should be capitalized. Criteria considered include:

  • All components are physically attached to one another to make up a single piece of equipment and function as a singular unit 

  • All components will be collectively disposed of at the end of the useful life of the equipment

  • Individual components cannot be used independently of the remaining pieces of the fabricated unit, and cannot function separately apart from the fabricated unit to which it is attached. 

  • The accountant may ask for a diagram illustrating how all components listed on the Fabricated Equipment Approval form are fabricated together into one unit. 

  • If the fabricated unit is valued at $5000 or more. 

  1. If a WBS will be used to purchase the components of fabricated equipment, Accounting will contact Sponsored Programs to verify fabricated equipment is allowable per the sponsor.
  2. If the proposed purchases correctly summarize fabricated equipment, Accounting will approve the form and will notify the departmental business contact and Sponsored Programs.
  3. If the financial accountant concludes the proposal does not qualify as fabricated equipment, they will discuss the reasons outlined directly with the departmental business contact.  Sponsored Programs will also be notified. 
  • The departmental business contact and the PI can provide additional information to support a requested category revision. The financial accountant will review the documentation and determine if a category revision is warranted.  Revisions may be due to the fact that some of the items planned to be purchased as part of the fabrication should actually be set up as stand-alone capital equipment; or, the nature of the item is not capital equipment at all (e.g., software licenses and user fees, warranty/maintenance agreements, consumable items).  Non-capital/supply items are subject to indirect costs. 
  1. The financial accountant will review all documentation and provide an assessment of the equipment category (i.e. stand-alone equipment, fabricated component, non-capital/supply item). If additional information is required, financial accountant will contact the departmental business contact. 

  2. If there are any modifications to the fabricated equipment, the department must submit a revised Fabricated Equipment Approval form to alert the financial accountant. 

     

During Fabrication/Purchase

  1. If there are any modifications to the fabricated equipment, the department must submit a revised Fabricated Equipment Form to alert the financial accountant. 
  2. Charge all capital components (click here for information on which costs should be capitalized) to 553820 (Fabricated Equipment-Component Purchases). The original charge must be to this G/L. Do NOT charge to a 53xxxx non-capital/supply G/L and then post a journal entry to move it to 553820. 
  3. Create a spreadsheet to track all orders and send it to Fixedassets@unl.edu initially and monthly thereafter as components are purchased. The spreadsheet should include: 
  • Description and total cost of fabricated equipment. 
  • Detail for each component: 
  1. For a committed item that has not been paid/posted, run SAP Commitment Line Item Report using display variant (Layout) /ZCOM  for cost centers or /ZCOC for WBS elements and export the following fields to Excel: Cost Object, Vendor Name (Name 1), Amount (ValCOArCur), PO Number (RefDocNo), and Description (Name). 
  2. For an item that has been paid/posted, run SAP Detail Line Item Report using display variant (Layout) /ZRDTL for cost centers or /ZCOM for WBS elements and export the following fields to Excel: Cost Object, Document # (RefDocNo), GL (Cost Element), PO Number (if applicable), Description (Name), Document Type, Posting Date, Assignment, Vendor (Document Header Text), and Amount (ValCOArCur). 
  3. Details of the actual fabricated equipment purchases should be submitted monthly to the Property Accountant. These spreadsheet files containing the acquisition details are due no later than the last business day of the month following the component purchase. 
  4. Scan and email copies of invoices for all P-Card purchases and internal charges to fixedassets@unl.edu.  

After Purchase/Installation of Fabricated Equipment

  1. When the fabricated equipment is assembled and operational, provide Accounting with the completion date and location (building and room info) so the fabricated equipment can be capitalized in the asset management system (SAP). Inventory will send an equipment tag to the departmental property manager. For information on tagging, see Equipment Tagging Process.