Kathy, before implementing the practice described below, look at CAS 502 and
A-21 where you need to prove that the underlying purpose or/and circumstance
is different for a special cost treatment of this particular equipment. For
example, if you can prove that this equipment is different (in usage,
purpose or circumstance) from the equipment units that generated
depreciation or use allowance costs for your current indirect cost rate,
then you have a good case to pass an audit. An easier way is to lease this
piece from the seller. Louis.

At 05:39 PM 4/23/96 +0000, you wrote:
>We recently had a faculty member propose that the University
>purchase a piece of equipment that he needs for a project so that it
>could then be leased to a grant he is working on. The agency does not
>allow equipment purchase, however leasing arrangements are
>acceptable. (The grant involves federal funds passed through a state
>agency)
>
>Has anyone ever done this? If so, how did it hold up in an audit?
>
>Thanks
>
>kathy
>Kathleen L. Sukanek
>Associate Director of Research
>Office of Research
>
>University, MS 38677
>     (601)232-7482
>Fax: (601)232-7577
>Internet: xxxxxx@sunset.backbone.olemiss.edu
>
>
Louis Guin, PhD
Assistant Vice President
Office of Financial Analysis
University of Southern California
Univ Gardens Bldg Suite 107, Los Angeles CA 90089-8002
(P) 213 743-2454
(F) 213 748-0871
(e) xxxxxx@usc.edu