Section: Procurement and Auxiliary Services
Policy Number: 5-10
Policy Name: Class I Movable Equipment
Date: April 30, 1984
Revisions: October 2, 1985; April 6, 1989; August 1996; July 2000; July 1, 2005
To establish guidelines to be followed when ordering Class I equipment, parts thereof, or when assembling (from parts and pieces) Class I equipment.
A building will consist of the shell and other building components. The building shell would include interior walls, floors and ceilings, and whatever is necessary to complete the exterior of the building. Building components include those items that are necessary for the operation of the building regardless of its use, and where removal would involve costly or extensive alterations or repairs to the building. Included in this component category would be the plumbing system, heating system, central air conditioning system, electrical services, standard room lighting fixtures, fire alarm systems, built-in intercom systems, draperies, and the floor covering such as tile or carpet. It will also include duct work for exhaust systems; and conduit and wiring therein, even though equipment may be attached to same.
Class I Equipment
Class I equipment is defined as movable, tangible personal property with an acquisition or declared value of $5,000 or more, is functional for its intended purposes in and of itself (except for an external power supply if needed), and has a useful life of two years or more.
An accessory/peripheral is defined as an item intended to be used, with an otherwise identifiable equipment item, for the purposes of increasing or enhancing the productivity or utility of the equipment item. When the peripheral is purchased with the equipment item to form or enhance a system, the combined system may be considered one item of equipment for purposes of identification and valuation. When purchased separately and added to existing equipment, the value of the accessory/peripheral is added to the equipment value only when the cost of such accessory or peripheral meets or exceeds $2,000.
(NOTE: In the inventory and reporting of personal computers/computer systems, all items other than software will be considered a part of the system for cost and/or valuation purposes.)
Fabricated equipment is composed of material purchased for the purpose of building, constructing or assembling of Class I equipment that will be so identified upon completion. Class I equipment at the University of Delaware will include those items in which material costs alone are $5,000 or more, and will not include labor costs.
Repair and/or Replacement Parts are defined as items, regardless of cost, that are necessary to restore an item of equipment to a fully functional status. Repair/replacement parts are not Class I equipment in and of themselves.
If the cost of the repair or replacement part is 50% or more of the base equipment item, or if the item significantly enhances the functional capacity of the base equipment item, cost(s) of the part may be considered as equipment purchased and added to the equipment item's adjusted cost.
Those items of material and/or supplies that are not functional in and of themselves, even if used in conjunction with equipment items, and lose their identity/utility when viewed separately or used over an extended period of time, are considered expendable supplies (S&E).
When items of this type are purchased to enhance or increase the performance of identifiable equipment, an adjustment to the value of the (parent) equipment will not be made unless the unit cost of an added item is $2,000 or more.
Equipment, therefore, would include furniture, refrigerators, dishwashers, drawing files, testing equipment, etc. Equipment will also include lab benches, even though they may be bolted to the floor; hoods and associated exhaust fans, even though the duct is not included; specialized equipment, even though utility connections may be required; water coolers, except the built-in type, window air conditioning units, prefabricated facilities such as environmental control rooms that are purchased as a unit, special lighting such as stage lights, and projection screens that can be replaced. In all cases, the cost of the item must be at least $5,000.
An Assembly Part is an item that will be utilized in a building or assembling of a finished Class I equipment item.
The following applies to the above items:
An exception to the above definitions is the Power House Central Heating and Chilled Water Plant which actually consists of a shell, building components and equipment; but for control purposes and cost evaluations will be treated as a single building unit.
Capital Expenditure refers to the cost of an asset, including the cost to put it in place. For equipment, this means the net invoice price of the equipment, including the cost of any modifications, attachments, accessories, or auxiliary apparatus necessary to make it useful for the purpose for which it was acquired. Charges such as protective and transit insurance, freight, and installation will be included where such costs can be identified. Only external labor will be considered a capital cost.
Asset Management Records are detailed listings of Class I Equipment. They are maintained and segregated by department and building, identified by a University assigned number, and referenced by purchase order number, cost, acquisition date, ownership, fund source, description, etc.
Class I Movable Equipment will be purchased against the appropriate account code.
All purchased parts meeting the criteria in II-A-2-b above must be charged to the appropriate account code and referenced to the Class I equipment to which it will be attached (by University of Delaware Tag Number) on purchase documentation (purchase requisition and purchase order).
NOTE: Replacement or repair parts are chargeable to an appropriate 400 account code, unless meeting the criteria in II-A-2-d.
An assembly part, when ordered, is charged to the appropriate 153100 account code. When assembled, the code will be charged to the account code 167900 (if its fully assembled value is to be $5,000 or more). If a fully assembled equipment value is to be less than $5,000, all material acquired for this assembly is chargeable to an appropriate 400 account code. When the item is completely assembled and a journal voucher is generated to identify the item and its location, a tag will be assigned to the equipment.
Departments may request computer-generated summaries of Class I equipment by contacting Asset Management.
Insure that the appropriate object code is used when preparing documentation for purchase of material.
Provide the existing tag number of the base item of equipment to which items purchased under account code 167900 will be attached.
Office of Vice Provost for Research:
Notify Asset Management of "funding source" and "ownership" codes.
Procurement Services Department:
Insure that information is properly transcribed to the purchase order.
Note on the purchase order when arrangements have been made for delivery to the department.
Conduct a final review and determination of appropriate application of account codes. If the account code is to be changed, the originating department, Procurement Services, Accounts Payable, and the Office of the Vice Provost for Research (where applicable) shall be so notified. Changes after an invoice is paid shall be made by Asset Management and supported with a Journal Voucher.
Responsible for notifying Asset Management that there is an invoice outstanding for equipment valued over $50,000. Accounts payable will not pay the invoice until Asset Management confirms that the equipment has a UD inventory tag attached.
The authority to enforce this policy lies within the Procurement Services Department. Any questions may be directed to (302) 831-2161 or firstname.lastname@example.org.
Submitted by: Procurement Services