Stanford-owned assets are defined as capital equipment when all of the following criteria are met:

• acquisition cost $5,000 or greater

• useful life of more than one year

• individual, stand-alone, moveable, tangible item

The acquisition cost of an item is a determining factor when assigning a Capital Equipment Expenditure Type (ET) Code to the purchase transaction.

For items acquired through Stanford’s purchasing process, the acquisition cost is the cost incurred for the initial purchase of an item. Various types of cost may be included in the acquisition transaction. The section below provides specific details.

Correct determination of equipment title or simply stated who owns the equipment,  prior to placing purchase requisition is critical. It will determine whether the transaction is taxable. It also defines identification, stewardship, and reporting compliance requirements for the asset as well as disposition options available at the end of its useful life.

Generally speaking, for equipment purchased with sponsor funds on a grant, title will vest with Stanford University at the time of acquisition.

This requires sales/use tax to be applied to the purchase transaction. In these cases, sales tax is an allowable direct charge to the sponsored project.

Equipment purchased with contract funds must be treated on a case by case basis. It is critical to read and understand the terms and conditions guiding equipment.

Phase I: Acquisition

Capital equipment must be screened prior to a purchase. Your DPA will do this for you when they approve the purchase order. If we are borrowing equipment from another institution, contact your DPA for help with the loan process.

Using an appropriate “Expenditure Type” is of great importance no matter what process you are performing. It is especially critical when purchasing equipment – this determines ownership, drives depreciation, and helps Stanford remain consistent in our accounting practices!

Tagging equipment identifies ownership and is required by sponsors. Stanford uses a barcode tag for equipment, and each asset is assigned an individual number. Additional identification in the form of overlays are used to identify the equipment as either government-owned, donated, leased, or non-capital. In addition to uniquely identifying equipment, this also facilitates physical inventory. Some assets require an additional identifying overlay (donated, leased, government). It is also important to identify “non-capital” assets and assets that do not belong to Stanford. For example, a graduate student using his own laptop for a sponsored project on campus should physically identify it as non-Stanford owned.

In another example, two printers of the same make and model sit side by side. One is tagged; the other is not. The one that isn’t tagged may have been overlooked, or perhaps it was purchased on sale and truly isn’t capital equipment. An inventory taker or auditor wouldn’t know which unless it had a non-capital overlay on it. This identification assists physical inventory analysts and auditors, and it is a theft deterrent. Some assets are too small or sensitive to tag -- for these we assign a tag number but do not put the actual tag on the equipment

Research Proposal Phase – Research set-up and commencement

Phase II: In Service

In Service Considerations

You may wonder why it’s so important to identify the location of equipment. We recover a higher amount of F&A (Facilities & Administrative)from equipment coded in research space, so it’s very important that we identify the locations as accurately as possible. If equipment is moved, the new location must be recorded so we depreciate the equipment at the proper rate. Location is also important for risk management reporting, accountability and tracking.

If you are loaning equipment to another institution, contact your DPA for help you with the loan process. There is liability risk and sponsor approval may be required.

Physical Inventory

There are various methods by which an inventory is conducted. For example, wall-to-wall inventories in which every asset in the department is scanned, or stratified where a sampling of assets is inventoried. 

Inventory results of equipment on sponsored projects must be reconciled and reported by project to the sponsor. If items are not found, the sponsor may require Stanford to pay for them. A pattern of continuing losses could result in additional audit scrutiny, as well as liability for asset replacement. Additionally, the approval rating of Stanford’s property system can be placed in jeopardy.

Phase III: Excess

Excess Definition

The Excess phase begins when the asset is no longer needed for the project. In most cases this occurs as the project nears completion. Excess activities include transferring equipment to other awards, selling, or returning to the sponsor.

Disposal and Closeout Considerations

Appropriate disposition of equipment is an area that is often overlooked. The source of funding for an asset has a direct impact on how it can be disposed. Sponsor funded purchases and donations may have specific disposal restrictions. The key to determining disposal excess restrictions is to read the sponsor agreement or donation documentation.

Staff are encouraged to transfer useable equipment to other Stanford departments through the Property Reuse Website, which is for inter-departmental transfers only (people can list both capital and non-capital items on the reuse website, and can also post “wanted” ads).

If items do not transfer on the Reuse site, they should be sold through the SPS Surplus Property Sales Office, which is open to the public. SPS is the only campus organization authorized to write a bill of sale for equipment. Tags must not be removed from equipment.  The Surplus Property Sales Office will remove equipment tags. Since equipment is tracked over its life, it will retain its original ID number until its final disposition. Your DPA will assist you with any of these processes.

Regardless of funding source, equipment should never be thrown away. This includes non-capital equipment; your DPA must process all capital and sensitive non-capital equipment (electronic items such as PDAs, computer monitors, cell phones, etc.) via the Sunflower Assets system to ensure EH&S (Environmental Health & Safety) and sponsor requirements have been satisfied.  Check for electronic waste recycling sites online.

Transfers to other institutions are considered “disposals." Often, PIs transfer their research to another institution and take equipment with them. These transfers must be approved and documented by the dean’s office in advance! There may be a negotiation or transfer of funds from the receiving institution. Contact your DPA for guidance in this process.

Stanford’s equipment inventories and property management systems are under scrutiny by the ONR (Office of Naval Research), Stanford’s cognizant government agency. Stanford’s online system of record is Sunflower Assets (SFA); all data is entered into it by Department Property Administrators (DPAs).

Check the terms and conditions of your particular award for information related to the acquisition, ownership, and disposition of property. Some awards do not allow the purchase of particular types of equipment, while other awards are made specifically for that purpose. Some require pre-approvals before equipment may be purchased.

Documentation of allocability, i.e., the way in which the equipment benefits the project, is critical, particularly if the equipment is acquired late in the project period. Similar to the rules for the direct charging of administrative expenses, there is a parallel requirement for a good budget justification whenever you plan to charge “general purpose” equipment to a project. The federal bias is that such equipment is an indirect cost. If you need to purchase such equipment specifically for a project, the budget justification should be detailed in its linkage of the expense to the technical work of the project. There are no indirect cost waivers on non-capital equipment costing less than $5,000. Information on which rates to use each fiscal year, are available on the F&A Rate Page.