Finance and Administration

University Controller’s Office

Fixed Asset News

Beginning July 1, 2025, VCU's equipment capitalization threshold changed from $5,000
per item to $10,000 per item.

What does this mean to you?

Equipment costing less than $10,000 will no longer be capitalized and will no longer be added to your physical inventory sheets (except for HEETF, see additional details below). All current fixed assets not meeting this new threshold will remain for the time being.

What do you need to do differently?

When coding equipment purchases in Real Source, Works (P-cards), or using a journal voucher, please use the following account codes:

  • For equipment costing $10,000 or more (on a per unit basis) use an account code
    in the 700xxx series.
  • For equipment costing less than $10,000 (on a per unit basis), use an account
    code in the 720xxx series.  
  • Note that shipping and installation is considered part of the cost of the equipment
    and should be factored in as part of the per unit cost
  • The account descriptions have been updated in Banner, Real Source, and Works
    to reflect the new threshold.

Does the new threshold apply to software purchases?

The capitalization threshold for software purchases was already $10,000 and it will remain the
same.

Guidance on coding equipment purchases

This section contains guidance on account coding for equipment purchases.

Equipment vs Supplies

  • Supplies are consumable items and should not be capitalized.  They are coded
    to the 620xxx series of account codes.
  • Equipment has a useful life of more than 1 year.  For a complete definition of
    equipment, see the Fixed Asset Policy.
  • Equipment should be coded to the 700xxx or 720xxx series of account codes
  • Capital Equipment is equipment that costs $10,000 or more per item (including
    shipping and installation costs).  This should be coded to the 700xxx series.
  • Non-capital Equipment is equipment that costs less than $10,000 per item
    (including shipping and installation costs). This should be coded to the 720xxx
    series.

Shipping and Installation

Generally, shipping and installation costs should be coded to the same account code as the
equipment itself.  These costs are considered part of the cost of the equipment.  You should not use a separate shipping account code.

Please do not use the Installment Purchases account (637xxx) for installation charges.  This
account is only for leasing arrangements through the State’s Master Equipment Lease Program. This account is NOT for the physical installation of equipment.

Note for RealSource purchases:  In cases where the vendor requires a separate line in RealSource for shipping costs, you should still use the same account code as the equipment itself. You can create a separate line in RealSource, use shipping as the description, but code it the same as the equipment or supplies.  

Split Coding between Accounts

Some purchases may include a combination of equipment, software, repairs, and services.
There may also be situations when there is equipment being purchased with some items
costing  more than $10,000 per unit and some items less than $10,000 per unit.

In those situations the requisition in Real Source will need to have each line item coded
individually (split coded) to the appropriate account code.

HEETF Guidance

All HEETF purchases must be coded to 720190 (under $10k) or 700190 ($10k and over). Please use the index that was provided for your department for the specific fiscal year (new indexes are provided each year).

Shipping and Installation on HEETF purchases are allowable if it is included on the same invoice as the equipment.

Installation costs are also allowed, so long as it is a direct cost of setting up the equipment. 
Building modifications, new electrical outlets, etc., are not allowable costs. Unpacking and
testing are allowable costs.

Note that all HEETF funded equipment must be tagged and added to physical inventory sheets, even if it is below the $10,000 capitalization threshold. VCU identifies these items as controlled assets. This requirement is from the State Council for Higher Education (SCHEV).

Training Costs

Training costs are not capitalized and should not be coded to the 700xxx series or the 720xxx
series. When paying a vendor to provide training for VCU employees to learn how to use the
equipment being purchased, the appropriate service account code should be used (for example 600080 Technical and Computer Consulting).

Warranties

Warranties that are from the manufacturer and included with the equipment are considered
part of the cost of the equipment and should be coded to the same account as the equipment
itself (700xxx series or the 720 series). This is usually not a separate line on the requisition, but occasionally it is separate.

Standalone warranties that are purchased separately from the equipment should not be
considered part of the cost of the equipment and should not be coded to the 700xxx series or
the 720 series.

  • Standalone warranties can be coded to 600122 Equip Repair/Warranties.