Capital assets categories, thresholds, and estimated useful
life terms will be:
|
Asset
|
Monetary Threshold
|
Normal Useful Life
|
|---|---|---|
|
Land/land improvement
|
$3,000.00
|
Unlimited
|
|
Buildings/building improvements
|
$3,000.00
|
30 years
|
|
Facilities and other improvements
|
$3,000.00
|
15 years
|
|
Infrastructure
|
$3,000.00
|
30 years
|
|
Personal property
|
$3,000.00
|
3 years
|
|
Leasehold improvements
|
$3,000.00
|
30 years
|
(Ordinance 262, sec. 1, adopted 9/12/06)
For clarification purposes of this policy the above items are
generally defined as, but not expressly limited to, the following
definitions:
A building is a structure that is permanently attached to
the land, has a roof, is partially or completely enclosed by walls;
a building improvement must extend the life of the building or increase
the value of the building. Examples of capitalized building improvements
are structural changes and installation of upgrade of roofing, heating,
and cooling systems, electrical, etc.
Facilities are considered to be assets built, installed,
or established to enhance the quality or facilitate the use of land
for specific purpose. Facility improvements are considered to be fencing,
landscaping, parking lots, recreation areas, septic systems, and pavilions.
Usually considered stationary and can be preserved for a
significantly greater number of years than most capital assets. They
are often linear and continuous in nature. Infrastructure improvements
should extend the useful life and/or increase the value by 25% of
the original cost or life periods. Examples of infrastructure are
streets, curbs, gutters, sidewalks, fire hydrants, bridges, dam drainage
facility, radio tower, water main and distribution lines, light systems
and signage.
The purchase price or fair market value at time of gift,
any commissions, professional fees, land excavation, fill, grading,
drainage, demolition of existing building (less salvage), property
removal (relocation or reconstruction) of others (railroad, telephone,
and power lines), date of purchase accrued mortgage interest and any
unpaid taxes and right-of-way cost.
The construction of new buildings or improvements made to
existing structures by the lessee, who has the right to use these
leasehold improvements over the term of the lease.
Fixed or movable tangible assets to be used for operations
that the life of extends beyond one year. Examples of personal property
are vehicles, other motor vehicles, furnishings, and equipment.
(Ordinance 262, sec. 2, adopted 9/12/06)
(a)
Factors
to be considered in determining items to be capitalized are as follows:
(1)
The expected normal useful life is three years or more.
(2)
The item has a unit cost of $3,000.00 or more. Unit cost should include
any charges for freight or installation.
(3)
The item is not consumed, unduly altered, or materially reduced in
value immediately by use.
(4)
The item is such that it is normally used in sets, or multiple units
which, as a collective unit, has a total value in excess of that established
as the minimum and which otherwise satisfies requirements of a fixed
property, e.g., set of tools, dishes.
(b)
Factors
to be considered in determining items that should be excluded from
capitalization are as follows:
(1)
Item is such that it requires regular replacement because of rapid
wear.
(2)
Item is such that one-time use of it will destroy the item for further
usefulness.
(3)
Items that are installed or otherwise added to a fixed asset where
such additions require merely returning the item to a functioning
product, e.g., engine overhauls, replacement parts to a computer,
replacement lens to a camera.
(4)
Items that are considered to be historical treasures such as works
of art.
(c)
Factors
in determining an item’s value shall be made in accordance with
GAAP, which include the following:
(1)
Items should be recorded at historical cost or estimated historical
cost. Cost includes purchase price or cost of construction plus any
other charges incurred to place the asset in its intended location
and condition for use.
(2)
Donated or confiscated assets should be recorded at their fair market
value on the date donated or confiscated. The fair market value is
the estimated amount at which the asset would be exchanged with a
willing buyer and seller when neither is forced into the exchange.
(3)
Disposed assets should be recorded at the lower of their book value
or net realized value (fair value less cost to sell).
(4)
Idle or obsolete fixed assets should be written down and reclassified.
(d)
Factors
to be considered when depreciating an item:
(1)
Depreciation is the allocation of the total acquisition cost of a
fixed asset over its estimated useful life. General fixed asset depreciation
should be recorded in the accounts of governmental funds after implementation
of GASB Statement No. 34. Depreciation of fixed assets accounted for
in a proprietary fund should be recorded in the accounts of that fund.
(2)
Straight-line depreciation method shall be used and is calculated
by dividing total asset cost by estimated useful life in years.
(Ordinance 262, sec. 3, adopted 9/12/06)
