A6: COMMODITIES VS. EQUIPMENT
11/3/98
Fiscal Agent Handbook Index | Fiscal Controls Index




The budget development process imposes upon Fiscal Agents the responsibility for distinguishing between commodities and equipment.  The following guidelines establish the criteria for making the distinction.

A commodity is any article or material which meets one or more of the following conditions:
 
 

  1.  It is consumed in use.
  2. It loses its original shape or appearance with use.
  3. It is expendable, that is, if the article is damaged or some of its parts are lost or worn out, it is usually more feasible to replace it with an entirely new unit rather than repair it.
  4. It is an inexpensive item, having characteristics of equipment, whose small unit cost makes it inadvisable to capitalize the item.
  5. It loses its identity through incorporation into a different or more complex unit or substance.
From the above criteria, the following definition for commodities has been developed: Tangible items purchased for consumption within a period of a year or less, as well as those durable items of equipment with a greater life expectancy whose per unit cost is less than $100. Library books, regardless of cost and life expectancy are considered to be equipment. An equipment item is a material unit which meets all of the following conditions:
 
  1.  It retains its original shape and appearance with use.
  2. It is non expendable, that is, if the article is damaged or some of its parts are lost or worn out, it is usually more feasible to repair it rather than replace it with an entirely new unit.
  3. It represents an investment of money which makes it feasible and advisable to capitalize the item.
  4. It does not lose its identity through incorporation into a different or more complex unit or substance.
From the above criteria the following definition for equipment has been developed:
Movable tangible items whose per unit cost is greater than $100 with a life expectancy exceeding one year.  Equipment, except for components, is non consumable.  Library books regardless of cost and life expectancy are defined as equipment. Questions regarding the subject of commodities vs. equipment should be directed to the Controller's Office, room E 212.  The Director of Financial Affairs/Controller may be reached by phone on extension 5143.
For more information contact
Controller's Office