2.2 Accounting

Acquisition transactions are coded based on equipment type and source of funding. Accuracy is critical to facilitate reconciliation and ensure accurate reporting. Expenditure Type (ET) codes are defined within the University Chart of Accounts.  For detailed information, refer to the "Common Expenditure Types Used for Property and Equipment" and the "Sponsored Award Expenditure Type Guidelines" documents at the end of this section.


Questions about this policy can be answered by:

Dunn, Stan

Associate Director

Property Management Office

(650) 725-0081

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1. Capital Equipment

The capital threshold for Stanford-owned equipment is $5,000. Capital equipment must meet all of the following three criteria:

  1. acquisition cost $5,000 or greater
  2. useful life of more than one year and
  3. be an individual, stand-alone, moveable, tangible item

Stanford-owned capital equipment is financially depreciated based on its asset category and associated expenditure type code. Correct use of expenditure codes is critical to ensure accurate asset accounting and reporting. Its useful life may extend well beyond its financial depreciation period; as such, it remains on record until disposed at the end of its life cycle.

Accountability (e.g. proper recording, use, tracking, reporting, etc.) is not limited to Stanford capital equipment; it is also affected by ownership, terms and conditions, and other stewardship responsibilities. See section 3.3, Records, for additional information.

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2. Acquisition Cost

The acquisition cost of an item is a determining factor when assigning a capital equipment ET 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 costs may be included in the acquisition transaction. The following table provides specific details.

Acquisition Cost for Purchases of Stanford-Owned Property  
Expenses Included Expenses Excluded

Asset cost


Freight Maintenance service agreements
In-transit insurance Installation services or other in-house labor provided by Stanford personnel
Federal excise tax Upgrades to the infrastructure of a building necessary for the asset to become operational
Sales or use tax Training costs
Duty Vehicle license and registration fees
Vendor installation costs directly attributed to the asset  
Accessories (e.g., lenses, covers, etc.)  


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3. Acquisition Costs for Non-Purchase Acquisitions

For items acquired by means of loan, incoming no-cost transfer, lease, rental, donation, or sponsor furnished, the acquisition cost or value is provided by the owner or sponsor or it is determined by other means of evaluation such as estimates or appraisals.  Please contact your University Property Administrator (UPA) for guidance regarding appraisals, cost estimates, or valuation of sponsor-owned equipment.

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4. Upgrades to Existing Capital Assets

During the life of a capital asset, there may be a need to upgrade the equipment by acquiring additional components. For components to be considered a capital upgrade they must have an individual cost of $5,000 or greater and a useful life of more than one year. The components must also enhance the asset’s capability beyond its original functionality and extend the useful life of the capital equipment by at least one year. The upgrade component must be assigned its own Stanford barcode and entered separately into Sunflower (SFA) property management database.

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5. Software Capitalization

Software is capitalized when its acquisition value is $500,000 or more, excluding warranty and training. Contact your UPA for guidance regarding recording of software in Sunflower.

When the acquisition cost of software is less than $500,000 it is expensed. This is true even if the software is integral to the operation of the equipment.

See additional information regarding software capitalization policies.

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6. Computer Clusters

Computer clusters are acquired in place of larger supercomputers to perform a task usually assigned to a supercomputer. A cluster consists of computers individually having an acquisition cost less than $5,000 but with an aggregate cost for the cluster purchase of $5,000 or greater.

To qualify for capitalization, a computer cluster purchase must meet all of the following criteria:

  • include a minimum of 24 computer processors
  • all work together as parallel computing units for a minimum of three years
  • the computer cluster is intended to serve a specific purpose
  • the need for a computer cluster must be clearly justified and documented

Note: If any part of the computer cluster needs replacement, the replacement is considered an expense since it is the total value of the cluster that is being used for accountability and depreciation expense purposes.

Upgrades to a computer cluster need to meet all of the following:

  • cost $5,000 and greater
  • extend the original useful life of the cluster by at least one year
  • enhance the asset’s capability beyond its original functionality

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7. Vehicle Purchases

Vehicles with an acquisition cost of $5,000 or greater are capital equipment and should be charged to ET 53140. Vehicle license and registration fees are not included in the capital acquisition cost. They are expensed costs and should be charged to ET 56510.

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8. Fixed Equipment

Fixed equipment must meet all of the following criteria:

  • items must be considered as part of a building; usually permanently installed
  • items are accounted for as a composite cost of the building structure
  • must be acquired using a capital project account supplied by the Capital Accounting Department in the Controller’s Office
  • must use ET 53145
  • not recorded in SFA property management database
  • recorded as a capital project in Oracle Fixed Assets (FA) by the Capital Accounting Department

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9. Modular Furniture

Modular Furniture must meet all of the following criteria:

  • comprised of components integrated to create work station(s)
  • average cost of a workstation is $5,000 or greater
  • must be acquired using a capital project account supplied by the Capital Accounting Department in the Controller’s Office
  • must use ET 53135
  • not recorded in SFA property management database
  • recorded as a capital project in Oracle Fixed Assets (FA) by the Capital Accounting Department

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10. Non-Capital Equipment and Supplies

Acquisitions not meeting the definition of capital equipment are categorized as expense transactions. On Sponsored Projects, these transactions are generally subject to the application of Facilities & Administration (F&A) cost rates. 

Tracking and management of non-capital equipment and supplies may be required as defined within the terms and conditions of the sponsored agreement funding the purchase.

Computing Devices-OMB Uniform Guidance Definition:

  • Computing devices are machines that cost less than $5000 and are used to acquire, store, analyze, process and publish data and other information electronically, including accessories (or "Peripherals") for printing, transmitting and receiving, or storing electronic information.

Computing Devices-Federally Sponsored Agreements:

  • New Uniform Guidance Policy announced by Dean of Research Office on September 5, 2014.
  • Effective December 26, 2014, per Section 200.20 and 200.453 of OMB Uniform Guidance, computing devices may be charged directly to federally sponsored agreements awarded on or after December 26, 2014.
    • The direct charging of computing devices applies only to Federal grants and for those grants awarded prior to this date. The direct charging of computers may still be unallowable.  The specific terms of the grant will continue to apply.
  • OMB Circulars A-21 and A-110 are effective for federally sponsored agreements awarded prior to December 26, 2014.  See Property Manual, Chapter 3.7-Agreement Management, for additional details.

Computing Devices-Non Federally Sponsored Agreements:

  • Direct charging of computing devices to a non-federally sponsored project is appropriate if the computing device benefits the sponsored project.  Some non-federal sponsors may have specific requirements for direct charging of computing devices.

NOTE:  Computers with acquisition cost of $5000 and a useful life of at least 1 year should be categorized as capital equipment.

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11. Accounting for Fabrication Labor Cost

Appropriately accounting for labor costs associated with each fabrication will be critical for sponsor reporting on federal contracts. You can collect this information through the Labor Schedules in the Labor Distribution system. Each department establishes and communicates procedures for time-keeping.

Individuals typically charging time (e.g. directly related or hands-on labor) to a burdened fabrication tasks include:

  • research assistants
  • professional and hourly technical staff
  • research associates
  • post-docs

A PI's general project supervision and oversight time is not charged to a burdened fabrication task.

Departments should establish procedures to follow for making any adjustments to the amount of salary expense charged to fabrication task. Adjustment, if needed should be completed in a timely manner.

Review and adjustment procedures could follow 3 scenarios:

  • PI requests adjustment to % charged before the end of a pay period; Labor Schedule adjusted
  • PI requests adjustment to % charged following monthly review of Expenditure Statements.; journal transfer is processed
  • PI requests adjustment to % charged following quarterly Expenditure Statement certification review; journal transfer is processed

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