Mid-year equipment purchases represent equipment acquisitions that do not coincide with the fiscal period of the recharge/cost center. As a result, they are sometimes included in the annual rate proposal if anticipated or are not included if they were not anticipated or not able to accurately estimate. In either situation, the following applies:
Depreciation for mid-year equipment purchases cannot be included in quarterly JVs until the equipment has been placed into service in the center and a new depreciation schedule has been approved by the Dean/VP’s office and MAA.
Special consideration should be given when any portion of the acquisition will be charged to a sponsored project(s) or the equipment will not be used 100% by the center. These situations should be discussed with your Dean/VP’s office and MAA as soon as possible to determine if there are any unique issues associated with the equipment (e.g., program income implications).
Including Mid-Year Equipment Purchases in annual proposal
When the purchase of a piece of equipment for the operation of a recharge/cost center (center) is expected to occur within a period covered by a rate schedule, that piece of equipment may be included in the depreciation schedule of the rate proposal.
For a future equipment purchase to be eligible for inclusion in a center rate proposal, the acquisition date and cost of the equipment should be known or accurately estimated.
The depreciation start date should be based on the anticipated acquisition date. This is usually the start of the quarter following the acquisition date of the equipment. Center rates cannot include depreciation for equipment for any period prior to the anticipated acquisition date. For example, if the center rate begins July 1st and the anticipated in service placement of the new equipment is October 1st, the center can only include 3 quarters, or 75%, of the annual depreciation for that year.
Mid-Year Equipment Purchases not included in annual proposal
When the purchase of a piece of equipment for the operation of a center occurs within a period covered by a rate schedule and that piece of equipment was not included on the depreciation schedule in the rate proposal, centers should update their depreciation schedule and determine whether a mid-year rate adjustment is needed.
- If a mid-year rate adjustment is necessary, the center should submit an adjustment approval request to both their Dean/VP’s office and/or MAA highlighting the updated costs and the new depreciation schedule.
- If a mid-year rate adjustment is not necessary, the center should submit the new depreciation schedule to their Dean/VP’s office and/or MAA notating that a new proposal is not necessary.