How To

Know what to include in the purchase price of capital equipment.

For items acquired through Stanford’s purchasing process, the acquisition cost is the cost incurred for the initial purchase of an item. Various types of cost may be included in the acquisition transaction.  The table below show expenses included and excluded from the purchase price of equipment.  Both types of expenses can be included in a sponsored project proposal budget. Expenses included should be in the equipment section and expenses excluded in the "other costs" section of a proposal budget.

Expenses Included

in the Price of Equipment

Expenses Excluded

in the Price of Equipment

  • Asset cost
  • Freight
  • Federal excise tax
  • Sales or use tax
  • Duty
  • Vendor installation costs directly attributed to the asset
  • Accessories (e.g., lenses, covers, etc.)
  • Warranties
  • Maintenance service agreements
  • Installation services or other in-house labor provided by Stanford personnel
  • Upgrades to the infrastructure of a building necessary for the asset to become operational 
  • Training costs
  • Vehicle license and registration fees
  • In-transit insurance

 

Ownership of Equipment

Correct determination of equipment title or simply stated who owns the equipment, prior to placing purchase requisition is critical.  It will determine whether the transaction is taxable. It also defines identification, stewardship, and reporting compliance requirements for the asset as well as disposition options available at the end of its useful life.

Generally speaking, for equipment purchased with sponsor funds on a grant, title will vest with Stanford University at the time of acquisition. This requires sales/use tax to be applied to the purchase transaction. In these cases, sales tax is an allowable direct charge to the sponsored project. Equipment purchased with contract funds must be treated on a case by case basis. It is critical to read and understand the terms and conditions guiding equipment.

 

 

Filed under Equipment

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