University of Vermont

Cost Accounting Services 

Cost Accounting Standards Procurement of Movable Equipment

Departments should use the University’s requisition process to purchase movable equipment with a unit acquisition cost of $5,000 or more.Movable equipment may not be purchased using the University’s purchasing card program. Important accounting practices to follow during the procurement process are:
  • Determine the Unit Acquisition cost -  The net invoice price of the equipment including the cost of modifications, attachments, accessories, or auxiliary apparatus necessary to make the equipment operable usable for its intended purpose. Other charges such as the cost of installation, configuration, shipping/freight, handling,  duty, and protective in-transit insurance, shall be included in determining the acquisition cost. If multiple units are being purchased, allocate costs such as shipping to each unit to determine the correct unit acquisition cost. For instance, two computers which total $6,000 has a unit acquisition cost of $3,000.
Training, maintenance and warranties should not be included in the unit acquisition cost.
  • Factor in any equipment trade-in allowance - When acquiring movable equipment, the department may use existing equipment as a trade-in to offset the cost of the new equipment. The cost of the movable equipment will be net of any trade-in value. For instance, if a movable equipment item costs $7,000 and the trade-in amount is $1,000 dollars, the recorded cost of the equipment in the Asset management record would be $6,000.
  • Select the correct purchasing category - Upon determining the unit acquisition cost, the next important step is selecting the correct purchasing category for movable equipment. Each purchasing category has an assigned General Ledger (GL) expense account to it so accuracy is important. By selecting the correct purchasing category, the cost will be posted in the correct GL expense account. Costs such as shipping which are part of an unit acquisition cost but are on a separate line item of the requisition should have the same purchasing category as the the primary line item of the equipment.
Example #1 - Equipment whose unit acquisition cost is $100,000 or more is capitalized by the University and requires a specific purchasing category. For example, if a purchase of a bus cost $200,000, the correct purchasing category to select would be "VEHCL_PURCH>100K". 
Example #2  - Equipment whose unit acquisition cost is under $5,000 is considered an expendable item within the University's definition of movable equipment.  For example, if a freezer for a research lab costs $4,000, the correct purchasing category to select would be "RES_EQUIP<5000". 

Last modified November 15 2012 02:55 PM