For equipment purchases, in excess of $5,000 or the lesser of the district’s capitalization threshold, please complete the Equipment Purchase Approval Tree process to determine if the planned equipment purchase is allowable and to determine if equipment purchase is on the prior approval list as permitted by USDA Memo SP31-2014.
For capital equipment purchases not on the prior approval list in the Equipment Purchase Approval Tree, the school food authority (SFA) will need to complete the Form for Prior Approval by CDE for Capital Equipment Purchases. The Form for Prior Approval by CDE for Capital Equipment Purchases is not required if the Equipment Purchase Approval Tree documentation shows that the purchase is on the prior approval list.
Equipment expenditures may be allowable as direct costs provided that purchases of equipment, with a unit cost in excess of $5,000 or the lesser of the district’s capitalization threshold, have the prior approval of CDE (2 CFR 200.439* see below.) SFAs may use the Equipment Purchase Approval Tree process. In addition, keep all documentation of this equipment purchase approval process for audit purposes, if the purchase is allowable, based on the results.
*Capital Assets and Capital Equipment
2 CFR §200.12 Capital assets is defined as tangible or intangible assets used in operation having a useful life of more than one year which are capitalized in accordance with GAAP.
Capital assets include:
(a) Land, buildings (facilities), equipment, and intellectual property (including software) whether acquired by purchase, construction, manufacture, lease-purchase, exchange, or through capital leases; and
(b) Additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations or alterations to capital assets that materially increase their value or useful life (not ordinary repairs and maintenance).
2 CFR §200.33 Capital Equipment is defined by Federal regulations as tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the SFA/LEA for financial statement purposes, or $5,000.