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What Is a Capital Purchase?
All personal property purchased or acquired are assets of the university. A capital purchase is any item that cost $5,000 or more and has a useful life of more than one year. It must also be an individual, stand-alone, movable or tangible item. Examples include:
- Library books
Visit the Texas Comptroller website for a complete list of items and additional information.
When Is a Lease Purchase Capitalized?
A lease-purchase involves an item paid for on an installment payment basis, with UTSA assuming outright ownership when the terms of the lease purchase agreement are completed. Lease purchases are defined as when the lease purchase agreement has been signed and after the first payment is made.
When Is a Software Purchase Capitalized?
Software purchases become a capitalized item when the purchase price is more than $100,000, internally generated or a licensed agreement. The capitalization threshold for software over $100,000 includes: license fees (single or multiple), annual fees (one or multiple years), testing fees, setup fees and delivery cost. View Texas Comptroller's website for software policies and procedures before making a purchase.
What Costs Are Included in Purchase Cost?
The threshold cost of more than $5,000 must include associated charges and fees. If the amount is below the threshold, then it is a controlled purchase. A few examples of charges and fees include:
- Original contract or invoice price
- Freight charges and import duties
- Handling and storage charges
- In-transit insurance charges
- Taxes and fees imposed on the acquisition
- Installation charges
- Charges for testing and preparation for use
- Costs of reconditioning used items when purchased
- Parts and labor associated with the construction of equipment
- Other related acquisition cost
Contact Accounting Services for assistance with capital purchases.