Appendix E: Criteria for Distinguishing Equipment from Supply Items, Financial Accounting for State and Local School Systems, 2003 Edition (2023)

  • Appendix A: Summary of Account Code Changes
  • Appendix B: Other Resources
  • Appendix C: Glossary of Acronyms
  • Appendix D: Illustrative Financial Statements for an Independent School District
  • Appendix E: Criteria for Distinguishing Equipment from Supply Items
  • References
  • Reasons to distinguish between supplies and equipment
  • The disadvantages of a supply/equipment list
  • Criteria for distinguishing items from supplies and equipment
  • Distinction between embedded and mobile computers
  • Figure 2. Criteria for distinguishing equipment from supply items
  • Selection of level of control of supplies and equipment

supplies and equipment

This appendix discusses the importance of distinguishing between supplies and equipment and suggests criteria for making this decision.

Reasons to distinguish between supplies and equipment

Education agencies have found it useful to distinguish between supplies and equipment for several reasons:

  • The distinction can help you decide how to track or trace an item. For example, some funding programs require that all equipment be inventoried annually. At the same time, many school districts will take inventory of certain items, regardless of whether they are equipment or whether districts are required by law to do so.
  • The distinction can influence insurance decisions. Movable supplies and equipment are generally protected as part of the building's contents, while embedded equipment is generally protected as part of the structure.
  • The distinction is important for identifying the funds with which to purchase a particular item. For example, some funds, such as bond funds, generally cannot be used to purchase supplies, while other funds may exclude the purchase of equipment.
  • The distinction can affect calculations of cost of operations and cost per student. While most school districts include the cost of supplies when calculating actual operating costs, many school districts treat equipment differently. Some include all replacement equipment expenses in the current total cost of operation, excluding the cost of new and additional equipment. Others spread the cost of all equipment over several years. In either case, misclassifying supplies or equipment items can affect the resulting cost calculations.
  • The distinction can affect the amount of state or federal aid allocated to a school district. Several funding sources use per-student costs as part of their funding formula (see previous paragraph). Most funding programs limit the ways your funds can be spent, sometimes excluding supplies or equipment from your eligible purchase list.
A school district can take two basic approaches to distinguishing between supplies and equipment in the decision-making situations just mentioned:
  • Adopt a standard list of items, classifying each entry as a supply or equipment item.
  • Adopt a set of criteria to use when making your own ranking of supply and equipment items.
Each approach is discussed in the following text.

The disadvantages of a supply/equipment list


State departments of education and school districts maintain detailed lists of material items used in school district operations, identifying each item as a supply or item of equipment. These lists are useful in many situations, but they have at least four limitations in financial reporting:

  • Various state and federal aid programs offer conflicting supply/equipment categorizations.
  • Technological and philosophical changes in education continue apace. It is impractical to list and categorize the thousands of materials and devices used in school districts today, particularly in vocational education curricula. Therefore, without regular updates, supply/equipment lists quickly become out of date.
  • Ratings for certain items change due to price or technology changes. For example, most school districts classified handheld mini calculators as equipment several years ago when they cost more than $100. Now that these items have dropped in price to the $5 to $25 range, some school districts are changing the classification of these items to supplies;
  • Users tend to treat lists as complete and up-to-date, even when advised otherwise.
For these reasons, it is impractical to develop a universally applicable and easily updated supply/equipment list. Rather than presenting a list that could present as many problems as it purports to solve, this guide suggests that the best distinction between supplies and equipment can be made through the consistent application of uniform criteria across the state.

Criteria for distinguishing items from supplies and equipment

At one point, the federal accounting manual contained lists of supplies and equipment. These lists can never be exhaustive or exhaustive and quickly become out of date. To meet the need to differentiate supplies and equipment without exhaustive lists, the NCES proposed a set of criteria to distinguish equipment from supply items, listed in order of priority. (See Figure 2). The first "no" states that the item is a supply, not equipment.

equipment items

An item of equipment is any instrument, machine, apparatus or set of items that meets all of the following criteria:

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It maintains its original shape, appearance and character with use.
It does not lose its identity by fabrication or incorporation into a different or more complex unit or substance.

It is not dispensable; that is, if the item is damaged or some of its parts are missing or worn, it is more feasible to repair the item than to replace it with a new unit.
Under normal use, including reasonable care and maintenance, it is expected to perform its primary function for at least one year.

Supply Items

An item shall be classified as a supply if it does not meet all established equipment criteria.

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Distinction between embedded and mobile computers

In the event that a school district finds it useful to classify certain equipment into built-in and mobile categories, and unless otherwise required by federal, state, or local law, the following criteria shall be used.

ONEIncorporatedEquipment item meets these criteria:

  • It is an integral part of a building; that is, it is permanently attached to the building, functions as part of the building, and does considerable damage to the building if removed.
  • It is permanently attached to land and functions as part of the land (except for buildings or other structures).
Built-in equipment can be incorporated into a building at the time the building is constructed or later. Built-in equipment is sometimes referred to as fixed equipment.

MobileEquipment consists of items that meet these criteria:

  • They are transportable from one place to another without appreciable damage or alteration in the place from which they are removed or in the place where they are installed.
  • They do not function as an integral part of the building or site and are not permanently attached or attached to the building or site.
Equipment that is simply bolted or bolted to the floor, such as a heavy vise or desk, and that can be moved as a unit after these fasteners are removed is mobile equipment. The endMobilerefers to the permanence of the installation and not the size or weight.

Figure 2. Criteria for distinguishing equipment from supply items

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Appendix E: Criteria for Distinguishing Equipment from Supply Items, Financial Accounting for State and Local School Systems, 2003 Edition (1)

Selection of level of control of supplies and equipment

School district administrators have major responsibilities in the administration of school district funds and property. They are responsible for regularly monitoring and reporting the condition of these financial and physical resources. An important decision in designing methods to carry out these responsibilities is selecting the level of control to apply to various types of supplies and equipment.

The level of control applied to any item of supply or equipment can be thought of as the amount of time and effort spent tracking the item and the amount of information maintained about the condition and location of the item. The level of control applied to an item of supply or equipment generally falls into one of three broad categories:

Little or no check after purchase.Items in this category are of so little value that the cost of implementing procedures to protect them, monitor their use, or track their location and condition is not justifiable. These items include staplers and wastebaskets.

group control.Items in this category have little individual value, but together they are valuable enough to justify the cost of providing some form of control over their safety, use, location, and condition. These items include school chairs and desks.

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controle individual.Items in this category are of sufficient value to justify the application of control measures to each individual item. These items generally include all relatively expensive equipment, although the minimum value for such equipment may vary by school district.

Selecting the level of control to apply to an element is a simple process. Often, certain types of controls are required by law or standard practice. For example, a federal funding program may require that all items purchased with these funds be inventoried and reported periodically. Likewise, some funding programs require that all items of a certain minimum value be inventoried and reported periodically. The school district may decide on its own to inventory certain types of items, regardless of its funding source, simply because those items or the inventory information is valuable to the school district. The level of control can range from an annual inventory to recording daily departures and returns to a central station or depot. When applied to a specific item, the tier should be based on the item's relative importance to the overall operation of the school district and is usually directly proportional to the cost of purchasing, replacing, or repairing the item.

It is important to note that deciding how to track an item is relevant not only for equipment, but also for certain supply stocks. For example, any large stockpile of supplies, such as instructional materials, food, or custodial supplies, should be counted and checked periodically for damage, deterioration, or theft. Therefore, the control issue level applies to all tangible assets of any significant value to the school district.


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