Purpose

To outline procedures for fabrication (assembly) of a capitalized equipment unit.

Definition

Fabricated Unit

Transformation of materials (supplies and minor equipment) into an identifiable unit by fabrication and meets the following criteria:

1. Total finished value =>$5,000 and has a useful life of > 1 year.
2. The ownership or title-to code must be the same for the entire fabricated unit. Funding sources can not be mixed so part of the fabricated unit is owned by the Federal Government or another outside entity and the remaining part(s) is owned by the university.
3. Free standing, movable as an entire unit, not permanently attached to a structure, and will not lose its identity when installed in other property.
4. Unit must be complete in itself. It will be added to, accounted for, and removed from capital inventory as one unit or record. All pieces stay together until entire unit is surplused.
5. Assembled parts must be integrated, permanently attached to each other, and essential in the performance of the unit. A basic schematic diagram with a description must show how the parts are integral to the unit.
6. A fabricated unit with all assembled parts must be physically found in one location at all times. Parts which do not meet this requirement are considered individually for capitalization.

Policy

Fabricated, assembled or constructed equipment that meets the above definition will be capitalized and added to the equipment inventory. The faculty member and department will be responsible for pre-approval prior to purchasing of any parts or items for the fabricated unit. This includes a basic schematic diagram of the proposed fabricated unit with explanations of the integration of the parts (see Procedures section).

Costs to assemble or fabricate can include parts, shipping costs, and labor of an organized shop. Faculty time may not be included. Donated parts will be recorded at fair market value. (See Procedures below for details).

Network and communication wiring can not be capitalized as equipment. This is infrastructure and special rules apply. Contact Property Administration if you have questions concerning these costs.

Software that is leased or licensed for use and which is separately itemized on a vendor invoice can not be capitalized. Do not include this expense in a fabricated unit cost.

Replacement parts:
Once a fabricated unit has been initially completed and placed in service, all replacement items, parts, or pieces to upgrade or enhance the unit will be expensed.

Example: a battery is replaced with a more powerful battery. The new battery must be purchased as an expense using Account Code “23501 Equipment Maintenance & Repairs”. [Note: the original battery remains on inventory and depreciates as part of the fabricated unit.]

Prototype fabrications:
OSU may receive special grant or contract funding to assemble and test a specialized piece of equipment which has not been previously constructed. These prototype units are unique experimental pieces of equipment which are designed for a specific purpose. There is a testing period. Even though on the fixed asset inventory as an asset, the unit should not be coded as “in-use” until the testing period is completed or the end date of the grant/contract; which ever comes first. If the item is found to be non-functional after the testing period, it must be removed from inventory.

Removal of a fabricated unit from fixed asset inventory:
When a fabricated unit is no longer in-service as it was designed and the department wants to surplus the parts or use some of them for another purpose the asset record must be removed from the fixed asset inventory and any remaining depreciation expensed to the university. These parts can not be added back to inventory as a single asset or part of a newly fabricated unit.

Procedure

Transfer of Equipment Into OSU