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unit's regular accounting practices. <br />(2) "Equipment" means an article of nonexpendable, tangible personal property having a useful <br />life of more than one year and an acquisition cost which equals or exceeds the lesser of the <br />capitalization level established by the governmental unit for financial statement purposes, or <br />$5000. <br />(3) "Special purpose equipment" means equipment which is used only for research, medical, <br />scientific, or other technical activities. Examples of special purpose equipment include <br />microscopes, x-ray machines, surgical instruments, and spectrometers. <br />(4) "General purpose equipment" means equipment, which is not limited to research, medical, <br />scientific or other technical activities. Examples include office equipment and furnishings, <br />modular offices, telephone networks, information technology equipment and systems, air <br />conditioning equipment, reproduction and printing equipment, and motor vehicles. <br />b. The following rules of allowability shall apply to equipment and other capital expenditures: <br /> (1) Capital expenditures for general purpose equipment, buildings, and land are unallowable as <br />direct charges, except where approved in advance by the awarding agency. <br /> (2) Capital expenditures for special purpose equipment are allowable as direct costs, provided <br />that items with a unit cost of $5000 or more have the prior approval of the awarding agency. <br /> (3) Capital expenditures for improvements to land, buildings, or equipment which materially <br />increase their value or useful life are unallowable as a direct cost except with the prior approval <br />of the awarding agency. <br /> (4) When approved as a direct charge pursuant to Attachment B, section 15.b (1), (2), and (3) <br />above, capital expenditures will be charged in the period in which the expenditure is incurred, or <br />as otherwise determined appropriate and negotiated with the awarding agency. In addition, <br />Federal awarding agencies are authorized at their option to waive or delegate the prior approval <br />requirement. <br /> (5) Equipment and other capital expenditures are unallowable as indirect costs. However, see <br />section 11, Depreciation and use allowance, for rules on the allowability of use allowances or <br />depreciation on buildings, capital improvements, and equipment. Also, see section 37, Rental <br />costs, concerning the allowability of rental costs for land, buildings, and equipment. <br />(6) The unamortized portion of any equipment written off as a result of a change in capitalization <br />levels may be recovered by continuing to claim the otherwise allowable use allowances or <br />depreciation on the equipment, or by amortizing the amount to be written off over a period of <br />years negotiated with the cognizant agency. <br />(7) When replacing equipment purchased in whole or in part with Federal funds, the <br />governmental unit may use the equipment to be replaced as a trade-in or sell the property and use <br />26 <br /> <br />