LAC 28:XLI.1107. Definition―Supplies vs. Equipment

A. An LEA can take two basic approaches to distinguish between supplies and equipment in the decision making situations: adopt a predetermined list of items, classifying each entry as either a supply or an item of equipment, or adopt a set of criteria to be used in making its own classification of supply and equipment items. 1. List of Items―At one time, the Federal Accounting Handbook contained lists of both supplies and equipment. Such lists can never be comprehensive or exhaustive, and quickly become outdated. 2. Set of Criteria―An item must be considered a supply if it does not meet all the stated equipment criteria listed below. a. It can be expected to serve its principal purpose for at least one year. b. It is nonexpendable; that is, if damaged or worn out, it can be repaired without being replaced. c. It does not lose its identity through fabrication or incorporation into a different or more complex unit. d. It is equal to or greater than $10,000 per unit cost in value. If a grant regulation requires a lesser per unit cost in value, then the lesser unit cost in value applies. 3. Food is always considered a supply. Software costs that are below the district’s capitalization threshold should be coded to supplies. Expenditures for software that exceed the district’s capitalization threshold should be coded to equipment. B. School districts maintain rigorous accountability for their property whether it is capitalized or not. For accountability and internal control purposes, many items of property that do not meet the districts' capitalization threshold must be inventoried. Thus, the Department of Education recommends maintaining inventory and tracking items that do not meet the equipment criteria if needed for insurance purposes and/or the item has "street value." For instance, districts might inventory DVD players and computers for internal control purposes but not capitalize them due to their low cost.