4.0 - Recharge/Service Center Capital Purchases


Cost Accounting, Financial Management Services


December 2015


May 2019




To provide guidance to recharge/service centers on the allowable ways to purchase capital assets associated with the recharge activity.


Capital assets associated with a recharge/service center activity must be purchased or leased from a non-recharge/service center account. Ideally, purchases and leases of capital assets would be funded from a renewal and replacement 92* account within the same organization as the recharge/service center 66* account.


Cost accounting standards do not permit the recharge/service center to recover the cash outlay for capital asset purchases or leases in their annual rates. Regulations however, allow the recharge/service center to include the depreciation of allowable capital assets in rate calculations. To fund future capital purchases, departments can only transfer cash equal to the annual amount of depreciation from the recharge/service center 66* account to the renewal and replacement 92* account at least annually. This is the only transfer out allowed from a 66* account unless granted permission otherwise by the Chief Accountant/Controller.


Effective July 1, 2018, the purchase or lease of capital assets is no longer allowed on recharge/service center 66* accounts. Capital assets associated with a recharge/service center activity should be purchased on a renewal and replacement 92* account, if possible. If a 66* account is used on a capital requisition, Capital Asset Management will issue a correcting document to move the costs to the organization’s 92* account. If the organization does not have a 92* account, the department will be contacted for a different account number.


The purchase or lease of capital assets from a 67* or 69* account is allowed.


Exceptions for fabrications may apply. Please contact  auxacct@iu.edu with questions.


Capital Assets : An item that is acquired and is classified as an asset on the balance sheet because it has a useful life expectancy of one year or greater and meets or exceed the capitalization threshold.


Depreciation Expense: Equal allocation of the cost of a capital asset on the balance sheet to the income statement during the periods in which the asset is used.


Renewal and Replacement Account: Accounts used to set aside funds for replacement of renewable property (typically capital assets or desktop computers).


Recharge/Service Center Activity: An activity that furnishes goods or services to another Indiana University department for the convenience of the university and charges a fee directly related to, and not more than the allowable cost to provide the goods or services.


OMB Uniform Guidance (PDF) "Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards"


RSOP #3: Including Annual Depreciation Expense in the Recoverable Rate Calculation


RSOP #7.0 Recharge Center Transfers


Organizations that bill other Indiana University departments for goods or services