- 4209.1 Purchase or Lease of Equipment
- 4209.2 Fabricated Equipment
- 4209.3 Transfer, Release or Sale of Equipment
- 4209.4 Maintenance of an Equipment Inventory
- 4209.5 Useful Life and Depreciation Allowance
- 4209.6 Off-Campus Use of Equipment
- 4209.7 Disposal of Equipment
This policy covers:
- Items that should be classified as equipment;
- Requirements regarding the purchase of new equipment;
- Rules governing the transfer, release or sale of equipment;
- Requirements for maintaining the University’s equipment inventory system;
- Factors used in determining useful lives and in calculating the depreciation allowance for equipment; and
- Guidelines for locating and using University equipment off campus or at home.
Equipment is an asset of the University that should be safeguarded and used only for University programs and purposes. Equipment must be depreciated according to useful lives established by the University.
Reason for the Policy
The University must properly classify, safeguard, and depreciate its equipment, and must abide by federal guidelines and the terms of sponsored awards with respect to the purchase, use, and disposition of equipment.
Capitalization Threshold - The capitalization threshold is the minimum amount at which a piece of equipment may be capitalized. Yale University’s capitalization threshold is $5,000.
Equipment - Equipment is tangible, non-expendable, University property that has an estimated useful life of greater than one year and a per unit acquisition cost equal to or greater than the University’s capitalization threshold. Final determination as to whether equipment meets the criteria for capitalization is made by the Controller’s Office.
Fabricated Equipment - Fabricated equipment represents the costs incurred to fabricate non-expendable, tangible personal property by building or assembling various components and or materials into one identifiable unit. Such costs are accounted for as equipment in process until the item is completed and placed in service, at which time it is added to the University’s Moveable Equipment Inventory. Fabrications associated with sponsor-funded research and development are not considered true assets of the University and, therefore, will not be capitalized.
Moveable Equipment Inventory - Moveable equipment inventory is a complete record of all equipment and furnishings which have been capitalized by the University. It is maintained by the Controller’s Office and is subject to a biennial physical inventory to validate its accuracy.
For a more detailed description on classification of equipment, refer to procedure 4209 PR.04 Moveable Equipment Inventory Accessories and Composite Assets. Questions regarding classification and or capitalization should be referred to the Controller’s Office at email@example.com.
- When a department is evaluating whether to purchase or lease equipment, it must consider the overall costs associated with each purchase or lease alternative and must work with the University’s Procurement Department to ensure that the purchase or lease transaction conforms to all University procurement standards.
- Principal investigators planning to purchase equipment using sponsored project funds should refer to the specific terms of the sponsored agreement and contact the Office of Sponsored Projects for any necessary advance approvals.
- The purchase or lease of equipment is to be made only when there is an approved budget to cover such purchase or lease.
Equipment fabricated at the University will be capitalized and included in the Moveable Equipment Inventory only if both of the following two criteria are met:
- Upon completion, the aggregated allowable costs of the fabricated unit equals or exceeds the University’s capitalization threshold. Allowable costs are the costs of materials, non-salary direct costs and the direct labor and their related fringe benefit costs attributable to the equipment fabrication. Costs incurred for the maintenance and or repair of fabricated equipment and do not extend the useful life of the item must be expensed as incurred.
- Upon completion, the fabricated equipment must have a useful life of more than one year. Fabricated items that will be disassembled prior to being placed in service may not be capitalized and must be expensed.
A separate Workday capital project must be set up by the Chart of Accounts Group of the Controller’s Office to which all capitalizable costs incurred during the fabrication period must be charged.
Fabricated equipment delivered to third parties without being placed in service at the University may not be capitalized.
For a detailed description of the MEI fabricated equipment process, please see procedure 4209 PR.01 Fabricated Moveable Equipment.
Transfer of Equipment from One University Department to Another
The University permits the transfer of equipment from one department to another, upon approval from both the transferring and receiving cost center managers, subject to the following:
- Equipment purchased with funds from a grant or contract, may not be sold by one University department to another, since such a sale may cause a sponsor to be charged twice for the same piece of equipment. Equipment funded by grants or contracts which are no longer being used by the a principal investigator should normally be made available to another investigator or department of the University at no cost. (However, costs incurred by the owning department to disconnect and/or move the equipment are allowed to be charged to the department receiving the equipment.); and
- The transfer of safety-critical equipment is not only subject to this policy, but also subject to Policy 3220 Purchase of Restricted Items. The Office of Environmental Health and Safety should be consulted prior to the transfer of any safety-critical equipment within or outside of the University. This includes transfers for the repair, service, or disposal of the equipment.
This policy does not apply to the sale, transfer or release of items of equipment or accessories that are not part of the University’s Moveable Equipment Inventory. Generally this would include any equipment or accessories that had an original purchase price of less than $5,000 and a useful life of less than one year. These items are considered expendable items and their disposition shall generally be at the discretion of the owning department’s dean or chair.
Disposition of equipment that was installed in buildings as a permanent fixture and removed for upgrading or renovation purposes shall require advance approval by the Associate Vice President for Facilities or his/her designee.
Transfer of Equipment to External Parties
Equipment which the University owns and no longer has a use for may be sold or released to another institution or third party with approval of the owning department’s dean, or chair, and the University Provost, subject to the following:
- Equipment purchased with federal funds may not be transferred to a for-profit institution;
- Equipment funded by a non-active grant may be released only if the department’s chair certifies that the equipment is not needed by any other Yale Investigators;
- If an active grant is being transferred to another academic institution, any transfer of equipment purchased on that grant during the active grant segment, must comply with all of the terms and conditions of the grant; and
- For a detailed description of University procedures regarding transfer of equipment to external parties please refer to procedure 4209 PR.06 Moveable Equipment Inventory Transfer, Sale, and Release.
In all cases, the requirements of the granting or contracting sponsor concerning the transfer of equipment, if more stringent, will supersede University policy.
Equipment to which the University does not have legal title may not be sold, transferred or released to another institution or third-party without the written approval of the owner. In general, equipment purchased with funds from a sponsored project becomes the property of the University when it is delivered. There are, however, some sponsored agreements under which the sponsor retains title to any equipment purchased with sponsor funds. Great care should be taken when transferring any items that were purchased with funds from a sponsored project and the Office of Sponsored Projects should be consulted if there is any doubt regarding who holds legal title to such an item.
Each department of the University must maintain an accurate inventory of its equipment. Accurate inventory must include proper tagging, location, and jurisdiction of capital assets. In addition, federal regulations require that a complete equipment physical inventory survey be taken every two years to verify the existence of the equipment.
- The Controller’s Office is responsible for maintaining an accurate record of the University’s Moveable Equipment Inventory and for the completion of a physical inventory of all moveable equipment every two years in accordance with Federal regulations covering sponsored awards.
- Departments are responsible for the safeguarding of all equipment assigned to their school, unit, and or department; for ensuring that all such equipment is appropriately tagged and that any changes are reported to the Controller’s Office including the sale, transfer, release, disposal or impairment of any equipment under their jurisdiction. Departments are also responsible for assisting the Controller’s Office in completing the biennial physical inventory of the University’s Moveable Equipment Inventory.
- The Office of the Controller is responsible for calculating the depreciation expense for all physical assets, including equipment that comprises the University’s Moveable Equipment Inventory. Depreciation is calculated on the straight-line basis over useful lives as determined by the Office of the Controller. A list of useful lives by class of equipment may be obtained from the Office of the Controller.
- Depreciation is calculated on a half-year convention, beginning in the year the asset is placed into service.
- Individuals traveling on University business or performing University business while at home are responsible for the care and proper use of any equipment (e.g., laptops, calculators, etc.) that they may temporarily take off campus after receiving appropriate departmental approval.
- When any equipment, even if it falls below the University’s capitalization threshold, particularly information systems/high technology equipment, needs to be taken outside of the United States, individuals should consult with the Provost and the Office of General Counsel to determine if a special export license is required. Both civil and criminal penalties can be incurred for transporting certain equipment outside the U.S. without proper approval.
- Equipment may only be located in non-University space if the Department Chair or Administrator has approved its off campus location, and the equipment has the standard Yale issued asset tag (for equipment that meet the capitalization threshold) affixed to it. The department lead administrator must maintain a record of the location of such equipment in the official equipment inventory, and notify the Office of Risk Management if any equipment will be off-campus for more than thirty consecutive days.
- Without advance authorization for off-campus use of University property, an employee will be personally responsible for the full cost of repair or replacement of damaged, destroyed or lost property and for any injuries to others, or damage to the property of others resulting from the off-campus use of University property. With advance authorization, and provided the equipment is used in accordance with instructions for proper use, the University’s insurance may pay for any loss of or damage to the equipment, and any injuries to others or their property. The department would assume the Office of Risk Management’s deductible allocation.
- Under no circumstances will the University be liable for any loss or damage to the University property, property of others, or for any injuries to any persons if such loss, damage or injury resulted from the failure of the user to use the equipment in the manner in which it was intended, or to follow all instructions for proper use. See Policy 1110 regarding personal use of University property.
Departments are responsible for the equipment they purchase and also its eventual disposal. The business office of each department has the authority to approve of the disposal of equipment in their department.
- Departments are responsible for maintaining accurate records of equipment assigned to their departments. Accordingly, if equipment is disposed of it is the responsibility of the department to ensure that the MEI System is updated to reflect the disposal.
- For those departments with access to the MEI System, the disposal can be made online. Departments are responsible for selecting the proper deletion code that reflects the reason for the disposal.
- For those departments that do not have access to the MEI System, the Controller’s Office must be notified of the disposal by contacting the Controller’s Office at firstname.lastname@example.org.
Before disposing of any safety-critical equipment, Departments must first notify the Office of Environmental Health & Safety to obtain approval and the appropriate clearance(s).
See section 4209.3 Transfer, Release or Sale of Equipment regarding the disposition of equipment purchased with sponsored funds, which may require consultation with the Controller’s Office, Procurement Services, the Provost’s Office, and the Office of the General Counsel.
Roles and Responsibilities
Schools/Departments - Responsible for the safeguarding of all equipment assigned to their school, unit, and or department. Departments are responsible for ensuring that all such equipment is appropriately tagged and that any changes are reported to the Controller’s Office including the sale, transfer, release, disposal or impairment of any equipment under their jurisdiction. Departments are also responsible for assisting the Controller’s Office in completing the biennial physical inventory of the University’s Moveable Equipment Inventory.
Deans/Chairs - Responsible for approving the sale, transfer or release of equipment no longer being used by the University to another institution or third-party after certifying that the equipment is not needed by any other investigator at the University. Provost approval is also required. See Provost Office below.
Controller’s Office - The Controller’s Office is responsible for maintaining an accurate record of the University’s Moveable Equipment Inventory and for the completion of a biennial physical inventory. It is also responsible for calculating and recording depreciation expense and for establishing and assigning useful lives for all University physical assets.
Provost Office - Authorizes the sale, transfer or release of equipment to other institutions or third-parties.