For service and recharge centers, equipment is considered depreciable if:
- The useful life is longer than 1 year, and
- It is used in service center activities, and
- The cost is equal to or greater than $5,000 per individual equipment tag number. Cost includes calibration, installation, freight, trade-in, and sales & excise tax.
Effective July 1st, 2016, the University has changed their equipment threshold and it is now in alignment with the Service & Recharge Center equipment threshold. Service and recharge centers can purchase equipment costing less than $5,000 on their operating budget. Centers can depreciate only equipment costing $5,000 or more.
The acquisition cost of equipment is determined using the University's equipment policy as described in Administrative Policy Statement 61.1.
There are several ways depreciable equipment used for service center activities can be acquired:
- Depreciable equipment is typically purchased from the equipment reserve budgets of the service or recharge center.
- Depreciable equipment acquired with federal grant funds may be turned over to the service or recharge center after the equipment has served the purposes of the grant, provided title is given to the University. See restrictions on recovering cost of federally funded equipment for more information.
- Depreciable equipment may be leased. The terms of the lease will determine whether it is a capital lease or an operating lease. Refer to the lease page for more information.
- Depreciable equipment may be donated to the University and used by the service or recharge center.
- Designated university-wide service centers may request central University funds to acquire depreciable equipment.
- Depreciable equipment for service centers may be purchased by a department using non-federal funds. The department can recover the cost of the purchased equipment by receiving services without charge or charging departmental equipment to the service center equipment reserve account up to the cost of equipment, with prior MAA approval.
* Depreciable equipment MAY NOT be purchased on the operating account.
The portion of equipment funded by federal grants & contracts cannot be recovered in the rates to federal users. Federally-funded equipment can be used in service center operations if the University has title to the equipment and the grant that paid for the equipment has expired. If the center has federally-funded equipment it would like to include in rates to non-federal or non-UW users, please contact MAA.
Equipment costing $5,000 or more per item and purchased on non-federal budgets cannot be included in full in the rates in the year of purchase. The cost is recovered by including depreciation or use allowance in the rates over a period of time.
Depreciation = (Acquisition Cost - Residual Value) / Useful Life
Use Allowance = Acquisition Cost * 6.67%
For a definition of the terms used in the calculation of each method of recovering the equipment cost, see glossary.
Note: Interest costs on capital leases cannot be included in rates to federal users and depreciated. The center should not include interest cost in the acquisition of equipment.
Including depreciation or use allowance of an individual piece of equipment is optional. For each equipment class, the center can elect to use either depreciation or use allowance, but not both methods.
The equipment class code is the first two digits of the "Class Code" field in OASIS (authorization required).
|Quicker method to recover cost||Yes||No|
|Residual value of equipment used||Yes||No|
|Useful life used in calculation||Yes||No|
|Can method be used if equipment is no longer in use||No||No|
|Can method be used once useful life is over||No||Yes|
If depreciation or use allowance is included in the rates, the center needs to include a schedule which details the following information for each piece of equipment included in the rates.
- Type of equipment
- Tag number in OASIS (authorization required)
- Total cost of equipment
- Budget numbers funding equipment cost
- Cost that is being depreciated
- Useful life (depreciation only)
- Annual depreciation or use allowance amount
- Date depreciation begins (depreciation only)
- Date depreciation end (depreciation only)
- Use allowance taken to date (use allowance only)
MAA reviews & approves the schedule when it is submitted. An updated depreciation or use allowance schedule can be submitted at any time during the year. Since equipment must be listed on the schedule to include depreciation in the rates, most centers update their schedule with their annual rate proposal.
Centers submit JV’s directly to email@example.com for processing, provided the center has an approved depreciation schedule on file with MAA and/or their respective Dean’s office. If a center does not have a current approved depreciation schedule, they will need to work with their Dean/VP’s office and MAA before transferring depreciation recovery. It is the center’s responsibility to ensure proper approvals are received. Generally this is achieved via the rate proposal submission and approval process, when equipment depreciation recovery is included in the proposal.
These approvals, at a minimum, should include an email, memo or other documentation of the approval from the appropriate Dean’s/VP’s office and MAA. An equipment JV reconciliation must be submitted with the annual rate schedule. The reconciliation must document the JV number, dollar amount of the transaction, date, and a reference to the date of the approved depreciation schedule. This must be maintained on an ongoing basis and may be requested periodically by MAA or UW Internal Audit, State and/or federal auditors. For sample reconciliation please see our Forms/Templates page.
After an equipment schedule has been approved, the center prepares a journal voucher (JV) at the end of each calendar quarter to transfer the quarterly depreciation recovery or use allowance recovery from the operating account to the equipment reserve account.
** For JV preparation instructions and requirements visit the UW Financial Reporting JV website, https://finance.uw.edu/fr/journal-voucher#submit-jv.
For depreciation JV purposes you will be debiting the operating budget and crediting the equipment reserve budget for the amount of depreciation you are transferring using object code 15-01-00. An example of how this may look is provided below.
Submit JVs to firstname.lastname@example.org a month after the end of the calendar quarter.
|January - March||Due by April 30|
|April - June||Due by July 31|
|July - September||Due by October 31|
|October - December||Due by January 31|
Record the proceeds (if any) from the sale of the equipment in the equipment reserve budget. There is no impact upon the operating budget.
Any gain or loss on the sale of equipment is recognized in the equipment reserve budget.
Remove equipment from the depreciation/use allowance schedule and stop include depreciation or use allowance in the rates once the equipment is no longer used by the center.