What is Fabricated Equipment?
Fabricated Equipment is defined as scientific or other complex equipment comprised of a number of individual components that are fabricated / built into a single function unit. Fabricated equipment is capitalized as a single asset for a combined total cost in excess of $5,000, is free standing, is complete in itself, does not lose its identity when affixed to other property, and has a useful life greater that one (1) year.
Typically, these components would be purchased with separate transactions and may be from multiple vendors. All components must function as a singular unit and will be collectively disposed of at the end of the useful life of the equipment. Individual components cannot be used independently of the remaining pieces of fabricated equipment and cannot function separately apart from the fabricated unit to which it is attached.
The need to fabricate equipment comes when this equipment does not already exist off the shelf or additional functionality is lacking in an existing piece of equipment.
All materials, supplies and services from outside vendors or authorized internal recharge activities used in the fabrication of this equipment are EXEMPT from indirect costs, if title is retained by the University. Department labor, travel, or other operational expenses associated with the fabrication, such as salaries of the Principal Investigator(s) (PIs), graduate student researchers, or other comparable personnel who participate in the fabrication process are NOT included in the acquisition cost of the fabricated equipment are ARE subject to indirect costs.
What is NOT Fabricated Equipment?
- Standard items that are altered or customized to make them usable on a sponsored project do not qualify as fabricated equipment.
- Connecting components together in a system (physical or virtually) does not constitute an equipment fabrication. (i.e. when individual computers and servers are joined to create a network)
- Components greater than $5,000 which are not physically attached or can function independently should be considered stand-alone capital equipment. Those items that are less than $5,000 should be considered “supplies and materials” instead of capital equipment.
- A sponsored project for the purpose of constructing experimental equipment does not characterize fabricated equipment.
If audited, departments must be able to justify the capitalization of fabricated equipment.
Please note: If a computer is purchased because it is required to run complex scientific equipment and the fabricated equipment cannot function without it, the computed can be capitalized as part of the fabricated equipment. However, the computer MUST be used STRICLTLY for that fabricated equipment and cannot be used in any other capacity.
- Maintenance contract (first year only) on a sub-component, if in place at the time the asset is initially put into use.
- Software if sole use is for the fabricated equipment, or it is critical part of the equipment (i.e., fabricated equipment would not function without it, and it is developed only because it is necessary for the function of the fabricated equipment)
- Modification costs of existing equipment (if adding new functionality). Note that adding new functionality involves something other than expanding on an existing functionality.
- Testing costs to confirm proper assembly only. Testing to see if an item produces intended results or whether it works in a specific environment is not considered fabricated equipment costs.
- Travel, if travel supports both testing and research; travel costs must be prorated between the two types of effort.
- Modification costs of Fabricated Equipment only if prior to initial use or deployment for research. Modifications due to design flaws discovered in the first use or deploying is not allowed. Fabrication of the changes to the fabricated equipment and/or its software is allowable.
- Installation costs, if necessary, to make sure the fabricated equipment is functioning properly prior to initial use and if directly related to the installation.
- Cannibalized parts, i.e., parts removed from an existing asset that has already been recorded, capitalized and fully depreciated.
- Maintenance contracts, other than for first year or if not in place at the time the fabricated equipment is initially put into use.
- Modification Costs of existing equipment if not adding substantial new functionality.
- Modification costs of fabricated equipment if after initial use or deployment for research.
- Repairs and Maintenance.
- Replacement Parts
- Replacement Supplies
- Spare Parts
- Supplies that do not become an actual part of the item, e.g., books, tools, paper towels, test equipment, etc.
- Testing if data gathered is to be used in research
- Travel if it supports that research or is made to discuss design issues.
- The Principal Investigator (PI), in conjunction with the department administration, identifies if a fabricated equipment is to be included in his/her upcoming proposal.
- The PI complete and submits the Fabricated Equipment Questionnaire to the assigned Research and Sponsored Programs Grants / Contracts Specialist.
- Ensure that the cost related to the Fabricated Equipment is included under the items excluded from MTDC.
- Upon initiation of award, please following instructions from Research Financial Services.