The purpose of this policy is to provide definitions and procedures for recording and accounting for the various types of fixed assets of the city in accordance with generally accepted accounting principles, as applied to governmental entities.
(1999 Code, sec. 8.2001)
A fixed asset is defined as tangible assets costing more than $5,000.00 with a useful life of more than three years.
(1999 Code, sec. 8.2002)
Fixed assets include the following:
(1) 
Real property.
Includes all land parcels, regardless of size, purchased, donated, or otherwise acquired by the city for any public purpose, including building sites, parks, streets and roads.
(2) 
Buildings.
Includes all city-owned buildings (or structures which serve as buildings, such as permanently established trailers) exceeding $5,000.00 in original cost. Permanently attached fixtures installed during construction are considered a part of the building. Subsequent addition of equipment will be recorded as machinery and equipment. Major improvements (improvements exceeding $10,000.00 or 20 percent of the original cost) are capitalized as a part of the original structure. All additions to existing structures exceeding $5,000.00 in original cost shall also be capitalized as a part of the original structure. Repairs and/or remodeling costs are not capitalized.
(3) 
Improvements other than buildings.
Includes improvements exceeding $10,000.00 (or 20 percent of original cost, if available) such as park facilities, parking lots and infrastructure assets. (Infrastructure assets include streets, roads, sidewalks, bridges, underground structures and piping, etc.) Improvements other than buildings are generally not individually identifiable as specific assets.
(4) 
Machinery and equipment.
Includes all motor vehicles, trailers, and construction and maintenance equipment where the unit cost exceeds $5,000.00.
(5) 
Office machinery and equipment.
Includes all office equipment and machinery, including computers, typewriters, telephones, etc., where the unit cost exceeds $5,000.00.
(6) 
Furniture and fixtures.
Includes all office furniture and fixtures such as desks, tables, file cabinets, and chairs, where the cost exceeds $5,000.00. Furniture and fixtures purchased as a group or set, where the cost is less than $5,000.00, may be capitalized as a group.
(7) 
Construction work in progress.
Includes all partially completed projects, except roads and bridges. Upon completion, these assets are transferred to one of the above classifications.
(1999 Code, sec. 8.2003)
The following costs associated in determining the total acquisition of a fixed asset are to be capitalized, i.e., added to the cost of the asset:
(1) 
Purchase cost before trade-in allowances and less discounts, or a qualified appraisal of the value at the time of acquisition if the asset is donated.
(2) 
Professional fees of attorneys, architects, engineers, appraisers, surveyors, etc.
(3) 
Site preparation costs such as clearing, leveling, filling, and demolition of unwanted structures.
(4) 
Fixtures attached to a building or other structure.
(5) 
Transportation, installation and training costs.
(6) 
Any other expenditure required to put the asset into its intended state of use.
(1999 Code, sec. 8.2004)
The acquisition cost of any asset shall be reduced by receipts for the sale or reimbursement of salvage materials or work initially charged to the cost of acquisition or construction. The assets for which no records of acquisition exist shall be determined by the finance department and department head, using accepted accounting methods.
(1999 Code, sec. 8.2005)
The following guidelines with respect to the treatment of costs that are incurred subsequent to the acquisition or construction of an asset are as follows:
(1) 
Maintenance.
Expenditures that neither materially add to the value of an asset nor appreciably prolong its life. Maintenance costs keep an asset in an ordinary efficient operating condition. As a result, maintenance costs should not be capitalized.
(2) 
Replacement.
Replacing an existing asset with an improved or superior unit or component part, usually resulting in a more productive, efficient, or longer useful life. Replacement of an existing unit, or component part thereof, by another of like quality is not generally considered a replacement of the asset for accounting purposes. Only when the value of the original asset is increased, or the useful life is significantly prolonged, should the new value or replacement cost be capitalized.
(3) 
Additions.
New and separate assets, or extensions of existing assets. The cost of significant additions to assets should be capitalized and added to the value of the existing asset(s).
(4) 
Alterations.
Change in the physical structure of an asset which neither materially adds to the value of the asset nor prolongs its expected life. As such, alterations should not be capitalized.
(1999 Code, sec. 8.2006)
(a) 
All fixed assets in excess of the established minimums shall be capitalized.
(b) 
The finance department will maintain property inventory records.
(c) 
Each department head shall be accountable for all assets assigned to the department, and shall be knowledgeable at all times of the physical location of all assets issued to the department.
(d) 
Upon receipt of an asset, the department receiving the asset shall prepare a “Fixed Asset Addition” form and forward it to the finance department. The finance department will be responsible for tagging the asset and assigning an asset number.
(e) 
Transfer of assets between departments shall be initiated by completion of a “Fixed Asset Transfer” form. The form shall be forwarded to the finance department for recording purposes.
(f) 
Disposal of assets shall be processed by completing a “Fixed Asset Disposal” form. The form shall also be forwarded to the finance department for recording purposes. Disposal of an asset shall be necessary when the asset is either sold or is no longer in service.
(g) 
Physical inventories of assets shall be conducted annually by the finance department.
(1999 Code, sec. 8.2007)
(a) 
General fixed assets.
General fixed assets are those assets purchased or in use by all funds other than proprietary and trust funds. Depreciation of fixed assets contained in the general fixed assets classification may be calculated for cost accounting or other management purposes, but is not recorded in the governmental or related funds.
(b) 
Proprietary and trust funds.
Depreciation shall be recorded in all proprietary and trust funds (if applicable). For purposes of depreciation, no salvage values shall be estimated, and the method of depreciation shall be designated as the straight-line method. Depreciation shall begin on the date the asset is placed in service. The following is a representative list of estimated lives for depreciation purposes:
(1) 
Infrastructure (mains, services, improvements): 40 years.
(2) 
Buildings: 40 years.
(3) 
Furniture and fixtures: 8 to 15 years.
(4) 
Motor vehicles: 3 to 7 years.
(5) 
Heavy machinery and equipment: 10 to 20 years.
(6) 
Light and medium mobile equipment: 7 to 15 years.
(7) 
Office and other equipment: 5 to 10 years.
(c) 
All of the above useful lives are dependent upon the actual use of the asset. Some assets may be used more frequently than others and would require a shorter useful life for depreciation purposes.
(1999 Code, sec. 8.2008)