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 ($5K) 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 unit 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 equipment 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 (search on descriptions)  - Upon determining the unit acquisition cost, select the correct purchasing category for equipment. The clear descriptions of the purchasing categories include the expense account for easy searching and common unit cost items (shipping, installation, Transit Insurance).  By including the common unit cost items in a purchasing category, the requisition line items are minimized.
Example #1 - Equipment unit acquisition cost is $50,000 ($50K). The cost items of the equipment unit includes shipping and installation. Training is included but is not part of the unit cost. Upon searching the purchasing descriptions in the PeopleSoft requisition screen, the appropriate purchasing category description for the equipment unit is  "65007-Moveable Equipment $5K to $100K & Install,Shipping,Ins". The appropriate purchasing category description for the equipment training service costs would be "61207- Equipment Training Services". A total of two requisition lines would be required for this requisition example.

Example #2
 
- A new vehicle acquisition cost is $10,000 ($10K). New plates are required as part of this vehicle acquisition. The purchasing category description for the vehicle would be "65061- Vehicle cost between $5K and $100K". Since the cost of new plates are not included in the vehicle unit costs, the purchasing category description for new plates would be "63122- Vehicle Registration (new license plates only)". A total of two requisition lines would be required for this vehicle requisition example.

Last modified July 03 2017 08:19 AM