Capital Assets
Unsure whether your purchase should be considered a capital asset? View the capital asset decision tree.
Modifying existing capital assets
While less common than capitalizing new asset purchases, there are occasions where existing capital assets may be modified with newly acquired items. Upgrades or repairs to an existing capital asset can be capitalized if the cost is $5,000 or greater and one or both of the following criteria are met:
- Extends the useful life of the existing capital asset
- Adds functionality to the existing capital asset
Fabricated assets
Equipment fabricated from separately acquired materials and constructed by Michigan State University as part of a pre-approved project by CAM or the Contract and Grant Administration (CGA) can be capitalized as an asset, if the standard capital asset definition outlined above is met.
Asset systems
Capital assets may be a stand-alone single unit, or they could be a combination of parts that functions as a stand-alone unit. In the latter case, the capital asset is referred to as an asset system. Each piece of an asset system must add functionality to the asset in order to be capitalized.
For example, a microscope with a specialty camera and lens that totals more than $5,000 could be capitalized as an asset system. Essential functionality-adding accessories, like a power cord, could also be capitalized as part of the system; however, a dust cover would not be capitalized as it doesn’t add functionality.
Non-capital assets
Items that fit the definition of a capital asset but are valued at less than $5,000 at the time of purchase are considered non-capital assets. Learn more about tagging and creating non-capital asset records.