What costs can be capitalized?

Starting fiscal year 2010, equipment costing more than $5,000 or software costing more than $500,000 (UIHC is $5,000 for equipment and software) with a useful life of more than one year can be capitalized. Capitalizable costs include the cost of the item as well as costs paid to a vendor for freight, installation, set-up, and/or testing. These same costs are used to determine if an expenditure meets the $5,000 or $500,000 minimum cost for capitalization (it must also have a useful life of more than one year).

  • The asset capitalized is an item and components that can stand-alone are not part of the asset (exception: system assets at UIHC).
  • Software that is not intrinsic to hardware cannot be considered in conjunction with the cost of hardware to meet the capitalization test.
  • Software is capitalizable on a “per seat” license cost basis.