The dollar level for capitalization of equipment will be changing from $1,000 to $5,000 effective with requisitions prepared for fiscal year 1997-98. This change is being made to reflect inflation in the cost of equipment and to reduce the administrative cost associated with maintaining individual detail capital equipment records for pieces of equipment in the $1,000 to $5,000 range. The note in the UW-Madison Class Code definitions will be changed for 1997-98 to read as follows:

For capital class codes 4110-4610, include only those items that individually cost $5,000 or more and have a useful life of one year or more. The $5,000 minimum also does not apply to equipment accessories which are attached to previously purchased capital items. Ancillary costs, such as transportation and installation, should be capitalized. Replacement parts or renovation which costs $5,000 or more and which extend the useful life should be capitalized.

The 1997-98 UW-Madison Budget instructions, as well at the Auxiliary Budget preparation instructions will be changed to comply with the new capitalization levels and you should make corresponding changes to your 1997-98 S&E and Capital budgets as they are created. Questions regarding budget matters should be referred to the UW-Madison Budget Office or Auxiliary Operations Analysis office as appropriate.

On or about July 1, 1997, the Property Control Office will be changing the status of existing records in our central capital equipment data files, so that those records which no longer meet the definition state above will have a special status indicating that they no longer conform to our equipment definition. Listings will be produced at that time, by department, showing the records so changed. For a period of about one year, you may contact the Property Control Office to request reactivation of records, which may have been incorrectly changed in status. After that time, we will delete the records.

At the time the record status is changed, the value of deleted records will automatically be added to the estimated value of supplies by building, a file maintained by Risk Management for insurance purposes.

The change has effects on the budgets of extramural projects in funds 133 and 144. Research and Sponsored Programs Notice 97-5 explains these matters further.

We are anxious to reduce the record keeping burden imposed by the present capitalization level. However, it is important to note that the new level will exclude many personal computers from formal capitalization. Be assured that the lack of a formal capital record will not preclude any insurance recovery related to the loss of previously capitalized items, either by damage or theft. However, it is still incumbent upon the user of equipment to adequately protect that equipment and particularly to keep records of serial numbers of items to assist in recovery of any stolen items.

If there are questions about the effects of this change in extramural projects, please contact Research and Sponsored Programs at 608-262-3822. Questions regarding class code definitions should be referred to Accounting Services at 608-262-2018. Questions regarding the recording of equipment records should be referred to Property Control at 608-262-5351. Questions regarding insurance values should be referred to Risk Management at 608-262-0375.