Managing District Capital Equipment

Regulation # 219


Administrative Regulation Type: Administration

Responsible Administrator: Controller

Goal: Provide guidelines for the proper classification, safeguarding, and depreciation of equipment purchased by the College

Note: The policy states $5,000 is the WTCS capital threshold but that will be “phased-in” until FY 2020 at which time we will remove this note. Only items (or units/sets) that are $5,000 or more will be capitalized or depreciated even during the phase-in years.

FY 2018 (7/1/17) = $1,000
FY 2019 (7/1/18) = $2,000
FY 2020 (7/1/19) = $5,000

The College has a significant investment in equipment, representing long-term commitments to fulfill its mission. The College owns and controls all equipment purchased with District funds, unless otherwise stipulated by the funding source. Custody and use of all assets is the responsibility of the various schools and departments.

Safeguarding the College’s capital equipment assets is a priority for each department and those individuals responsible for those assets. Vigilance must be maintained to ensure that equipment assets are not lost, stolen or vandalized. Departments and their personnel should always try to be cognizant of risk regarding their equipment assets and do whatever possible to minimize that risk. Assumption of security and complacency regarding possible risk are the two most significant factors leading to asset loss.

The Office of the Controller administers capital equipment assets and is responsible for the centralized accounting and reporting.

Equipment purchases must meet all of the following requirements to be considered capital equipment:

  • The cost of the equipment must be $5,000 or greater, per unit or set (see additional clarification below)

  • The College must have title or ownership rights of the equipment

  • The equipment must have a useful life of two or more years.

Any equipment purchase that does not meet all of the above criteria must be recorded to the non-capital equipment expense accounts.

Equipment Upgrade expenses must meet all of the following requirements to be considered a capital equipment upgrade:

  1. The expense must be $5,000 or greater.

  2. The expense must increase the productivity or capacity of equipment beyond its original intent.

  3. The expense must extend the useful life by two or more years.

Any equipment expense that does not meet all of the above criteria must be recorded as repairs and maintenance.

Capital Equipment Unit or Set

General Guidelines

The following costs are applied towards the $5,000 acquisition cost and should be capitalized with the equipment:

  1. Any initial modifications, attachments, accessories, or auxiliary apparatus that are necessary to make an item of capital equipment useable for its acquired purpose

  2. Shipping charges, protective in-transit insurance, freight, and installation costs

  3. Upgrades, modifications, or enhancement parts that increase the useful life of the equipment by two or more years or add additional functionality

  4. Capitalized interest

Types of costs that may not be capitalized as equipment:

  • Equipment repair costs

  • Separate warranty costs or maintenance contracts

  • Demolishing or dismantling costs

  • Spare or replacement parts

Multi-Component Equipment

Multi-component equipment is comprised of individual pieces of equipment or material items that are connected together to operate as a system. Component pieces that individually cost less than the capitalization level but, when combined, exceed the capitalization level, shall be capitalized when purchased for one functional unit. Component pieces can be purchased from separate vendors and/or with separate invoices. Multi-component equipment requires use of a project ID to tie all transactions together. (Example: The purchase of computers for a computer lab can be considered multi-component equipment for initial purchase and refresh, assuming the purchase contains a minimum of 10 computers.)

Additional parts not purchased at the time of original purchase shall be expensed unless the parts individually meets the criteria for capital equipment.

Multi-component equipment is distinguished from fabrications (discussed below) in that multi-component equipment does not generally require construction or assemblage over time.

Example #1: Refresh of a computer lab would be considered multi-component equipment. However, the replacement of a single, malfunctioning computer would not, unless that computer individually meets the criteria for capital equipment.

Example #2: Installation of multiple moveable cabinets in a science lab would be considered multi-component equipment, if the total cost of the cabinets exceeds $5,000. Replacing a single cabinet would not, unless that cabinet individually meets the criteria for capital equipment.


A fabrication is equipment that is constructed or developed by combining parts or materials into one identifiable unit. To be considered a fabrication:

  • All component parts must work together as one unit;

  • The aggregate cost of all parts in the completed unit meet the $5,000 capital equipment threshold; and

  • The completed fabrication has a useful life of two or more years.

Individual components acquired during a fabrication project are considered equipment regardless of their unit costs. For example, three parts of a robotic arm each costing $2,500 would accumulate to one $7,500 capital asset.

There are several steps involved in creating fabrications and placing fabrications in service.

  1. Fabrication Approval — documentation requesting approval for the fabrication must be submitted to and approved by the Controller at the beginning of each fabrication project.

  2. Acquiring Parts for a Fabrication — Fabrications require the purchase of component parts and/or materials over time, so must be assigned a project ID in the financial system (Workday). Only costs integral to the fabrication should be charged to the project for capitalization. Integral parts include any piece or material that becomes a permanent part of the fabrication, any supply needed to build the fabrication, and any internal or external shop service fees.

  3. Completing a Fabrication — When a fabrication is sufficiently developed and is available for use AND meet the capitalization threshold, they should be “placed in service” also known as “PIS” (i.e., considered active equipment for depreciation). Units are responsible for notifying the Office of the Controller when a fabrication should be placed in service.
    A fabrication’s construction period is generally set by the scope of the project; however, units should review the status of all in-progress fabrications at least every 6 months. Projects that have not incurred charges after 6 months should be reviewed and placed into service or written off if they are impaired and will not be utilized. Exceptions should be carefully reviewed, but if there is a compelling reason to extend the project period, please notify the Office of the Controller for review. If work on the fabrication ends and the capital threshold of $5,000 is not met, the fabrication account must be closed and the asset must be expensed. 

  4. Adding Additional Expenses to a Completed Fabrication — After a fabrication has been placed in service any additional costs should be expensed as incurred. In some instances, additional costs represent an upgrade if the expense reaches $5,000 and may be capitalized as such. For costs to be considered a fabrication upgrade, they must increase the useful life by two or more years or add new or additional functionality to the existing fabrication. Fabrication replacement parts or repairs are not considered upgrades.

  5. Fabrication Modification/Subsequent Project — After a fabrication has been placed in service, any additional modification or subsequent related project that meets the capitalization criteria listed in #4 above should be treated as a separate asset and assigned its own tag number and useful life. The modification or subsequent project’s tag number should be associated with the original fabrication.

Example #1: The replacement of the wireless access points for one facility: If the total cost of the component parts for the wireless system total more than $5,000, including cabling, wireless access points, and installation, the fabrication would be considered capital equipment. Replacing a single, malfunctioning wireless access point would be expensed.

Example #2: Furniture: If the installation of furniture in a single office totals more than $5,000 when all components are included (desk, filing cabinets, bookshelves, chair, etc.), then the office set can be considered capital equipment. Replacing a single chair would be expensed.

Equipment Associated with Remodeling or New Construction

A group of assets that in total cost $5,000 or more (e.g., three replacement workstations costing $3,000 each) is not capitalized except for major new construction and remodeling projects where the $5,000 threshold is waived for the purchase of moveable equipment and furnishings provided they meet the following requirements:

The equipment must be non-expendable, tangible personal property having an economic useful life of two or more years. During the normal course of business, these items would be expensed solely because they did not meet the College's $5,000 capitalization threshold. This exception allows for the capitalization of an original complement of low cost equipment and furnishings for the initial outfitting of a tangible capital asset or operational unit, or an expansion or renovation to either.

Equipment eligible for this treatment should be budgeted and expensed using the equipment greater than $5,000 account code. Expenditures for items that do not meet these requirements should be expensed using the account code for non-capital (less than $5,000). All equipment that is being capitalized as a group must be charged to a single project ID and must be purchased by the time the space is placed in service. Any equipment purchased after the space is placed in service must be expensed unless it individually meets the capital equipment criteria.

Note: Major remodeling projects are those with a total cost, excluding equipment, of $100,000 or more.

Example #1: The College constructs a new instructional building with a budgeted project cost of $10 million dollars. Tangible equipment and furnishings are budgeted at $1.5 million. Assets that individually meet the capitalization threshold of $5,000 were purchased on the project totaling $200,000. These items should be capitalized as individual assets. The remaining assets purchased from the equipment and furnishings budget, which individually do not meet the $5,000 threshold, would be capitalized as a group(s) of assets with a cost of $1.3 million.

Example #2: Offices are remodeled to house a new instructional unit. The remodel project costs more than $100,000 and requires furniture and IT equipment totaling $20,000 (three workstations, a side table, conference table, chairs, overhead projector). Assets that individually meet the capitalization threshold of $5,000 should be capitalized as individual assets. The remaining assets, which individually do not meet the $5,000 threshold, would be capitalized as a group of assets.

Capital Leases

At times, the College may choose to lease capital equipment. Below are the conditions in the lease agreement that must be met to consider the lease a capital lease, and therefore be able to use capital funds. One of these conditions needs to be met.

  1. The life of the lease is 75% or greater of the assets useful life.

  2. The lease contains a purchase agreement for less than market value.

  3. The lessee gains ownership at the end of the lease period.

  4. The present value of lease payments is greater than 90% of the asset's market value.

Administration of capital equipment

  • Departments must receive prior approval before a sale, transfer of College capital equipment assets to an entity external to the College is conducted.

  • Disposal of all property will be in a manner consistent with College procedures, which can be accessed here: [Insert link to Disposition of College Property Procedures].

  • Whenever possible, capital equipment assets within the College must be re-used or reassigned when the original project or need for which it was acquired has been completed, unless otherwise restricted by the funding source.

  • Off-campus use of College capital equipment assets will be permitted only when it is for a business related purpose contributing to the College's mission.

  • Non-capital equipment should be tracked internally by a department when being used off campus, but Inventory Services need not be notified.

  • Per IRS guidelines, capital equipment donated to the College must be retained for a minimum of three years from the “in service date” prior to disposal.

  • Departments are responsible for covering the loss and/or undocumented disposals of capital equipment assets with net book depreciable value from their departmental equipment assets carryforward.

  • All items (units or sets) that are capitalized must have an inventory tag attached to the item or assigned to the unit/set. This inventory tag # will be tracked within WD and depreciated accordingly.

Equipment bought on sponsored projects

Departments may, at times, purchase capital equipment on sponsored projects with sponsor agency approvals. In these cases, if justified, equipment could be purchased on the sponsored accounts.

In all cases where capital equipment is purchased using sponsored funds in the College general ledger system, the equipment is the property of the College and is subject to all related oversights and procedures.

If a capital equipment asset is purchased with sponsored funds, and the Principal Investigator or fellowship recipient decides to leave the College and wishes to take the item (e.g. research equipment) with them, they or the external entity must purchase it from the department.

Certain granting agencies have a more restricted procurement process so the principal investigators and grant mangers must work with the Grants Accounting team to ensure compliance with the Uniform Guidance requirements and thresholds for the procurement of equipment.

The following excerpt is taken from the Uniform Guidance Section 200.313 – Equipment:

(d) Management requirements. Procedures for managing equipment (including replacement equipment), whether acquired in whole or in part under a Federal award, until disposition takes place will, at a minimum, meet the following requirements:

  1. Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who holds title, the acquisition date, and cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property.

  2. A physical inventory of the property must be taken and the results reconciled with the property records at least once every two years.

  3. A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage or theft must be investigated.

  4. Adequate maintenance procedures must be developed to keep the property in good condition.

  5. If the non-Federal entity is authorized or required to sell the property, proper sales procedures must be established to ensure the highest possible return.

Note: Non-sponsored fellowship accounts may also purchase equipment as long as they do so with approval of the fellowship granting agency and the purchase is an appropriate use of funds per the fellowship.


Capital Funds:

302 Capital Equipment


   312: Capital Equipment purchases requiring a project ID


Capital Ledger Accounts:

5840: Equipment Expense

Equipment under the capital threshold:

5230: Supplies/Minor Equipment Instructional

5231: Supplies/Minor Equipment Non-instructional

Cost Center Managers must budget for this expense when developing their budgets.

Note: Please see the additional policy on Purchased Software License & Maintenance Expenses for special accounting guidance for the determination of whether to capitalize or expense software and related expense.

Updated February 2017