University of Waterloo

CAPITAL OBJECT IDENTIFICATION HELP

Definition of a Capital Asset -tangible item greater or equal to $5,000 and has an expected useful life of 2 yrs + (i.e. not a consumable).

$5,000 threshold - calculated based on per unit, after tax in Canadian dollars. To estimate after tax total (assuming a 67% GST rebate):

5% GST - multiply by 1.65
5% GST/8% PST - multiply by 1.0965

Description	Capital Object (Greater or equal to $5,000)	Non-Capital Object (Less than $5,000)
Building/Alteration-Capitalized	6025	6035
Computer Networking-Capitalized	6076	6077
Equipment-Capitalized	6215	6205
Computer Equipment-Capitalized	6216	6206
Land	6230	--
Buildings-Design Fees	6231	--
Buildings-Site Services	6232	--
Collections	6233	--
Furnishings-Capitalized	6415	6425
Library Acquisitions	6510	--
Site Improvements-Capitalized	6641	6642
Vehicles	6860	--
Telephone Equipment	--	6680

Additional Account Notes:
- objects that start with 2XXX, 4XXX, or 5XXX should NOT be used for any purchases
- it is important to distinguish 6206 from 6205 (computer vs non-computer)
- fund 105 should have activity 500 and should have a fund class with values other than all zeros and a project that starts with 1XXXXX or 6XXXXX
- object 6510 should only be used with Library org units
- org unit 8088 CSE-SEEPAC can use 6595-purchases for resale
$0 lines - avoid using these possible (may be needed for receiving in Central Stores). Additional description/details can be put in Notes. This only applies to capital object lines - not a problem for non-capital items (even on the same PO).

Description - maximum is 80 characters. Ensure product description is near the beginning of all lines. Ensure the item description is identifiable.

Quantity - usually the quantity of componenents matches the quantity of the main equipment.
example: one monitor belongs with one computer system. There are no exceptions.
example: you could have 3 hard drives installed in one computer.

Component Equipment - The total cost of one item includes the main item and any components that are attached to that one item. For some unusual equipment, it is hard to determine what might be a component or a separate item. If you can't tell by the description, usually the Requisitioner can describe how the items on the PO are related. If there are capital and non-capital lines on one PO, please indicate appropriate objects associated to each line number.

Additional Costs to be Capitalized:
- installation
- freight (must be greater than $100 per charge, 6350 freight otherwise)
- customs (must be greater than $100 per charge, 6350 freight otherwise)
- software ONLY if bought with physical, capitalized equipment (6075 computer software otherwise)
- training is NOT included - please put to object 6575
- maintenance is NOT included - please put to 6200 equip mtnce or 6201 computer equip mtnce
( eg. 3 years silver support from the Sun Microsystems)
- warranty is included if it is for one year. Put extended warranties to 6880

- If one PO has both capital and non-capital objects and lump sums of additional costs, these costs need to be
proportioned onto separate lines for capital and non-capital

Example :	Desk #1	$6,000	object 6415
	Desk #2	$4,000	object 6425
	Installation	$100	$60 – object 6415 $40 - object 6425

Additions to existing equipment: sometimes the Requisitioner will ask for equipment that is under $5,000 to go to a capital object because it is to be added on to existing capitalized equipment. Please confirm with the Requisitioner if this might be the case. If the additional equipment on the new PO is greater or equal to $5,000 on its own, then you do not have to confirm that the existing equipment is also capitalized.

Equipment examples:
          - spectrophotometer                     -   centrifuge

Computer Equipment examples:
          - monitor                                       -   server
          - tablet PC                                       -   laptop
          - projector (but not a component of a computer - separate equipment)
          - printer (but not a component of a computer - separate equipment)
          - scanner (but not a component of a computer - separate equipment)
          - back up power supply for computer
          - data acquisition board (input/output board)

Computer Networking Examples:
          - switch                                           -   network manager

Additional Information @: http://www.adm.uwaterloo.ca/infofin/ca.htm
                                              http://www.adm.uwaterloo.ca/infosec/Policies/policy74.htm
                                                http://www.adm.uwaterloo.ca/infofin/AFF/object.pdf

More scenarios/examples of POs: Often you need to look at every item on a PO to determine the correct object because different quantities and components to equipment will affect the total unit cost of an item. Here are some common scenarios of capitalized and non-capitalized POs.

2-for-1 example:   Server #1    unit cost:   100% of $8,000
                           Server #2    unit cost:   0% of $8,000
                                        » Both servers go to object 6206

Explanation: Although it looks likes the first server should be capitalized because it is over $5,000, overall this is one PO in which we are getting 2 servers at a cost of $4,000 each. After tax, each server would be less than $5,000 and not capitalized.

CAPITAL AND NON-CAPITAL OBJECTS ON ONE PO EXAMPLE:
                Line 1                  Server                   1 unit @ $4,600
                Line 2                  Monitor                1 unit @ $ 500
                Line 3                  Keyboard               1 unit @ $    50
                Line 4                  Printer                  1 unit @ $ 800
                » Lines 1-3 go to object 6216, Line 4 goes to object 6206
Explanation:   Monitors and keyboards are considered components of computer systems as long as the quantities are the same (i.e. one monitor for one computer). $4,600+500+50=$5,150 which is over $5,000 and should be capitalized. Printers are considered a separate item, not a component. This printer is less than $5,000, so it should be non-capital computer.

COMPONENT EQUIPMENT EXAMPLE:
       Line 1    Separation-Control Unit, 120V   1 unit @ $4,100
       Line 2    Transfer Unit                           1 unit @ $1,000
       » If line 2 belongs with line 1, both go to object 6215
   » If line 1 and 2 are independent, then both go to object 6205.
Explanation: If line 2 is considered a component of line 1, then they add up to $5,100 and should be capitalized equipment. If they are considered separate pieces of equipment, then they are both under $5,000 and should not be capitalized.

US DOLLAR EXAMPLE:
Dry Pump       unit cost:   $4,500 USD   rate: 1.241
          » Equipment goes to object 6215
Explanation: The total cost of equipment is determined in Canadian dollars after tax. After the exchange rate, the total is over $5,000 and should be capitalized.

RESEARCH/NON-RESEARCH TAX EXAMPLE:
Dual Xeon Workstation                  unit cost: $4,650
  » If this is for research (GST), the object should be 6206
    » If this is for non-research (GST/PST), the object should be 6216
Explanation: For a research account, the total after tax would be approximately $4,757 which is under $5,000 and not capitalized. For a non-research account, the total after tax would be approximately $5,130 which is over $5,000 and should be capitalized.

Capital object - help