Equipment Threshold $5000

Effective July 1, 2000, the State of Tennessee increased the equipment capitalization threshold to $5,000. However, UT is required to maintain property records on “sensitive equipment”, which includes select items costing $1,000 - $4,999. This category includes computers, printers, audiovisual equipment, etc. To account for these changes, UT has made the following changes to the General Ledger (G/L) numbers:

A new G/L, 439400 - Sensitive Equipment, has been established for maintaining sensitive equipment items. (See ”Sensitive Minor Equipment” memo from Verna Howard dated 07/06/00).

G/L 62 Minor Equipment, is no longer a valid code. Items that would have previously been charged to code 462100 will now be charged to either 439100 – Operating Supplies, or the new object code, 439400 - Sensitive Equipment. A detailed object code listing is available under General Accounting on the Controller’s Office Web Site.

The current Knoxville campus Facilities & Administrative (F&A) Rate Agreement requires equipment costing $1,000 or more be excluded from F&A charges. This difference in thresholds between UT’s policy and the F&A rate agreement requires departmental bookkeepers and PI’s to adjust their procedures for coding equipment for proposal budgeting versus expenditure reporting.

For expenditure purposes, only equipment costing $5,000 or more should be charged to 61 - Equipment. Any equipment qualifying as sensitive equipment (as defined by the object code definitions) should be coded to 439400 - Sensitive Equipment. Both of these object codes will be excluded from F&A charges. All other “equipment” that does not meet the new definitions of 461000 - Equipment and 439400 – Sensitive Equipment, should be coded to 439100 – Operating Supplies. The Controller’s Office will perform a month-end review of each item charged to GL 439100 against a grant and contract account. Those purchases which fall in the $1,000 to $4,999 range will be reviewed and, where appropriate, will be moved to GL 460100 - Equipment Non-F&A. This transaction removes the F&A applied when the purchase was originally coded 439100 – Operating Supplies. Initial transactions should not be charged to G/L 460100.

Proposal budgets prepared for the Research Office should code equipment costing $5,000 or more to object code 61 – Equipment. Three separate dollar amounts are now required for G/L 439 – Supplies: 439100 – supplies whose individual cost is under $1,000; 460100 - supplies whose individual cost is over $1,000; and 439400 – Sensitive Equipment. G/Ls 461000, 460100, and 439400 are excluded from F&A.

Any questions concerning the above procedures should be addressed to the Controller’s Office (974-2493), the Office of Director of Finance (974-2247), or the Research Office (974-3466).