3.7 Property Standards
Replacement of Equipment
When an item of property is no longer efficient or serviceable but continues to be needed in the program or project for which it was acquired, or other programs permitted under 2 C.F.R. § 200.313(c), the property may be replaced through trade-in or sale and subsequent purchase of new property. In this case, the following conditions must be met:
- Same function and character. Replacement property must serve the same function as the original property and be of the same nature or character, although not necessarily of the same grade or quality.
- Timing. Purchase of replacement property must take place soon enough after the sale of the property to show that the sale and the purchase are related.
- Trade-ins. When acquiring replacement property, the recipient or subrecipient may use the property to be replaced as a trade-in. Value credited for the property, if the property is traded in, must be related to its fair market value. The recipient or subrecipient also may use the proceeds from the sale of the property to offset the cost of the new property.
- Subrecipients of States. State subrecipients must obtain the written permission of the State to use the provisions of this section prior to entering into negotiation for the replacement or trade-in of property.