Property

The Institute is required to establish and maintain a system to control Government property in accordance with the provisions of Federal Acquisition Regulations (FAR) Part 45, the NASA Federal Acquisition Regulations (NASA/FAR) Supplement Part 18-45, and the Department of Energy Regulation (DEAR) Subparts 945.5 and 917.74 of April 1984. 

To the extent of any inconsistency between these procedures and the terms of any contract or grant under which property is provided, the terms of the contract or grant shall govern. The institute shall be directly responsible and accountable for all Government property in accordance with the provisions of the contract or grant including property provided under the contract or grant which may be in the possession of or under the control of a subcontractor. The Institute shall maintain and make available such records as are required by the applicable regulations and must account for all Government property until relieved of accountability. Liability for loss, damage, or excessive use of property in a given instance will necessarily depend on all circumstances surrounding the particular case and must be considered in accordance with the provisions of the contract or grant. The Institute is obligated to furnish all necessary data to substantiate any request for relief of accountability. 

The Institute is contractually responsible as well, for all property obtained in connection with sponsored research projects and, through the Property Office, assists project supervisors in fulfilling the property requirements of their specific contracts or grants. 

In conjunction with the system used to control Government property and property purchased by specific research projects, the Institute maintains control of its own property utilizing the same techniques and property database. 

The title to all MIT-owned property shall always be in the name of MIT rather than in the name of any particular school, department head, or individual. Title to any property purchased with contract or grant monies will be as specified in the relevant contract or grant. 

Items of property purchased with 'discretionary’ funds resulting from Industrial Liaison Program reimbursements or summer session 'profit' distributions or other discretionary funds are Institute property and as such must have an Institute property number affixed thereto. 

A property identification number is assigned to each item of capital equipment and corresponds to the number on the bar-code label that is affixed to the equipment. When it is not feasible to tag an item, it will be assigned a property identification number. 

Personal items that may be mistaken as MIT property must be tagged with a personal property tag. These tags may be obtained from the Property Office or may be available from the Property Auditors or Property Inventory Auditors when they are performing inventories. The Department Head should advise the personnel in their department of the inventorying schedule for the respective department so that they will be aware of any forthcoming inventory. 

In the case where items are off-campus, the name of the borrower should be made available to the Property Office so that a letter and tags will be sent to the user to tag the equipment and verify the location. The Property Manager must be notified by email when equipment is temporarily moved off-campus (department approval required) and also when the equipment is returned to campus. 

MIT provides limited insurance coverage and, in general, the Government provides none. Since home users of equipment are responsible for the equipment while it is being borrowed, the question of responsibility for theft, damage, or loss should be resolved with the lending department’s Administrative Officer before any equipment is borrowed. Clarification of insurance coverage should be addressed to the MIT Director of Insurance and Legal Affairs. 

All items of equipment or systems of equipment with an acquisition cost of $5,000 or greater are considered capital (major) equipment and should be assigned G/L Account 421818. All items of equipment or systems of equipment between $1,000 and $4,999 are considered minor equipment and should be assigned G/L Account 421827. All computer related items under $1,000 are considered to be EDP expense and should be assigned G/L Account 421900. Office-related items under $1,000 are considered to be office supplies and should be assigned to G/L Account 420258. Laboratory related items under $1,000 are considered to be materials and should be assigned to G/L Account 420226. All maintenance and repairs of equipment should be assigned to G/L Account 420220. 

Enhancement parts with an acquisition cost of at least $2,000, which materially and permanently increase the value or useful life of a capital item, will be capitalized and their cost added to the capital cost of the item being enhanced; otherwise, they will be expensed. The purchase order or the tag number of the enhanced capital item must be referenced on the requisition and purchase order for the enhancement part in order for the enhancement part to be considered capital.

Enhancement parts with an acquisition cost of at least $2,000, which permanently increase the value of an item of minor equipment to $5,000 or greater and are acquired within 60 days of the acquisition date of the item of minor equipment, and which also permanently increase the useful life of the item, will have their cost added to the cost of the item of minor equipment being enhanced and both the enhancement part and the item of minor equipment will be capitalized; otherwise, they will be expensed. The purchase order or the tag number of the enhanced item of minor equipment must be referenced on the requisition and purchase order for the enhancement part in order for the minor equipment item and the enhancement part to be considered capital.

All constructed buildings will be capitalized and depreciated over its useful life. The life of the building will be determined by componentizing its material categories.

All purchased buildings will be assigned a life of 32 years. Any land costs associated with the purchase of a building will be separated and not depreciated.

Space changes that are budgeted under $100,000 will be expensed.

Space changes that are budgeted from $100,00 to $725,000 will be capitalized and depreciated over a twenty year life. If property is leased, the asset is depreciated over the remaining life of the lease.

Space changes that are budgeted above $725,000 will be capitalized and depreciated over its useful life. The life of the project will be determined by componentizing its budget categories. If property is leased, the asset is depreciated over the remaining life of the lease.

Leasehold improvements that are cash outlays from program funds are considered direct expense to the program. MIT does not recognize this as a capital asset and therefore, there is no depreciation expense charged against it.

MRO projects that are budgeted under $100,000 will be expensed.

All MRO projects that are budgeted $100,000 or greater which are upgrades or replacements to the building's structure or central mechanical systems will be capitalized. The life of the projects will be determined by componentizing its budget categories.

MRO projects that are budgeted $100,000 or greater which are repairs to the building's structure or central mechanical systems will be expensed. An example of this would be a repair of a leaking roof that might entail replacing a section of the roof.

Capital expenditure means the cost of the asset including the cost to put it in place. Capital expenditure for equipment means the net invoice price of the equipment, including the cost of any initial modifications, attachments, up to one year warranty, accessories, or auxiliary apparatus necessary to make it usable for the purpose for which it was acquired. It also includes the cost of incoming transportation incurred on shipments from external suppliers.

Equipment means an article of non-expendable, tangible, personal property which stands alone, is complete in itself, does not lose its identity, and has a useful life of more than one year.

Those items of equipment which have an acquisition cost of $5,000 or more are capitalized. (F&A cost is not applied.)

Those items of equipment which have an acquisition of less than $5,000 are expensed. (F&A cost is applied.)

Enhancement parts with an acquisition cost of at least $2,000, which materially and permanently increase the value or useful life of a capital item, will be capitalized and their cost added to the capital cost of the item being enhanced; otherwise, they will be expensed. The purchase order or tag number of the enhanced capital item must be referenced on the requisition and purchase order for the enhancement part(s) in order for the enhancement part(s) to be considered capital.

Enhancement parts with an acquisition cost of at least $2000, which permanently increase the value of an item of minor equipment to $5,000 or greater and are acquired within 120 days of the acquisition date of the item of minor equipment, and which also permanently increases the useful life of the item, will have their cost added to the cost of the item of minor equipment being enhanced and both the enhancement part(s) and the item of minor equipment will be capitalized; otherwise, they will be expensed. The purchase order or the tag number of the enhanced item of minor equipment must be referenced on the requisition and purchase order for the enhancement part(s) in order for the minor equipment item and the enhancement part(s) to be considered capital.

Enhancement parts will not be capitalized if the enhanced item has not been purchased by MIT or given as a gift to MIT.

Replacement parts, required to repair an item of capital or minor equipment and which simply maintain the original function of the equipment, will be expensed.

A fabricated item will be capitalized if the cost of the material making up the fabrication is $5,000 or greater, the useful life of the item is more than one year, the item is MIT-owned or government funded, and the item is identifiable as a discrete item.

This item is defined to include all equipment as well as electrical, electronic, and mechanical components, contractor-acquired and/or sponsor-furnished, which are being incorporated into a deliverable end item under the property terms of a contract/agreement, calling specifically to be constructed and delivered to formal addresses included in the contract/agreement. Deliverable end items are expensed.

These are expenditures needed to maintain equipment in a proper operating condition or to restore equipment to a proper operating condition. Maintenance and Repair costs are expensed.

All computer software, whether operating systems or applications, is expensed, except that the original operating system purchased with the computer is capitalized.

Software acquired, internally developed, or modified to meet the Institute internal needs, with no intention of marketing the software externally will be capitalized if the costs meet or exceed $250,000.