[HISTORY: Adopted by the City Council of
the City of Fairfax 5-8-1990. Amendments noted where applicable.]
The following procedures and guidelines are
to account for the fixed assets of the City of Fairfax. This policy
is for accounting purposes only and does not supersede any other policies
which address assessments.
As used in this chapter, the following terms
shall have the meanings indicated:
This is the standard estimated useful life of an item. To
be considered a fixed asset, an item must have a useful life greater
than one year.
This is the value of an item. The value will be based on
the invoice plus additional costs of preparing the asset for use.
To be considered a fixed asset, an item must have a value of greater
than $1,000.
A building or structure is a roofed and/or walled structure
that is City-owned. For example, a picnic pavilion would be considered
a structure although it may have no walls.
A separate class of asset set up to specifically account
for all computer equipment owned by the City. This category includes
personal computers, printers, modems and any other computer-related
item.
A weapon from which a shot is discharged using gunpowder.
This category is used to account for all firearms belonging to the
Police Department.
An item obtained by the City with a value of greater than
$1,000 and an estimated useful life of greater than one year.
Property seized by the Police Department that will be used
by the City. The City policy on forfeited property should be followed.
Assets that are used by people in any City facility that
are considered furniture or fixtures. This category includes desks,
chairs, credenzas, modular work stations, drinking fountains, etc.
Fund type originally payable for general fixed asset or donation.
Assets acquired before January 1, 2004, will not have a designated
investing source.
Any parcel of land that is City of Fairfax owned, whether
developed or undeveloped.
Grading, roads and parking lots on City-owned property that
will be capitalized.
Includes motorized and nonmotorized equipment that has a
primary function of the City of Fairfax street, park or utility maintenance.
It includes items such as tractors, mowers, snow blowers, etc.
An item used by employees to perform a mechanized task in
an office environment. For example, typewriters, telephones and adding
machines. However, cameras, VCR's, cellular phones, refrigerators,
microwaves, etc., are also included in this category. This category
does not include computer equipment as there is a separate distinct
category for computer equipment.
Improvements made to a City park that will be capitalized.
This category would include items such as playground equipment, back
stops, bleachers, flagpoles, etc.
This category includes all small tools and equipment such
as chain saws, battery chargers, post drives and so on. Vehicle equipment
as defined below is excluded from this category.
Equipment that is installed in/on a motor vehicle such as
radios, wing plows, sanders, lighting packages, radar units and tool
boxes.
Motorized vehicles owned by the City of Fairfax such as squad
cars and trucks.
A.
Identification tags will be affixed to almost all
assets currently owned and subsequently acquired. Land, sewer and
water mains, lift stations, wells and towers will not be tagged. Shotguns
in the Police Department will not be tagged. All other assets should
be tagged.
B.
Upon receipt of an asset, the department head will
request an asset number and identification tag from the Administration
Department. The Department Head is responsible for affixing the tag
in a conspicuous and readily accessible place.
C.
Assets under the capitalization amount will not be
tagged unless they are items that are considered easily portable and
there is a significant threat of theft.
A.
When a department acquires a new asset, the Department
Head is responsible for completing an asset acquisition form and requesting
an identification tag from the Administration Department.
(1)
Assets bought as a group (i.e., 50 chairs for the
Council Chambers, etc.), with the intent of keeping them in the same
location, will be treated as one asset. They will be entered under
one identification number and the total cost will determine the capitalization
value. If these assets are split at a later date, the same procedure
for a new asset will apply.
B.
The asset acquisition form shall contain the following
information:
(1)
Description. The description should clearly describe
the asset, keeping in mind that this description will be used to identify
the asset in the future, without being too lengthy.
(2)
Expenditure account. This is the expenditure account
that the invoice for the asset was coded to.
(3)
Location. This is the intended location in which the
asset will be stored.
(4)
Acquisition code. This is the code which describes
the funding source of the asset.
(5)
Activity code. This is the code which describes which
department purchased the asset.
(6)
Function code. This is the code which describes the
function of the department that owns the asset. Examples include general
government, public safety, public works, etc.
(7)
Vendor. This is the name of the vendor from whom the
asset was purchased.
(8)
Acquisition date. This is the date the asset was acquired.
(9)
Manufacturer. This is the name of the manufacturer
of the asset, if applicable.
(10)
Model number. This is the model number assigned
to the asset by the manufacturer, if applicable.
(11)
Serial number. This the serial number assigned
to the asset by the manufacturer, if applicable.
(12)
Invoice number. This is the vendor's invoice
number on the invoice of the asset.
(13)
Cost. This is the cost of the item. Cost will
be based on the invoice plus additional cost of preparing the asset
for use. Trade-in values will be use to reduce the carrying cost of
the new asset.
C.
The asset acquisition form should be signed by the
Department Head.
D.
Administration should input asset acquisition form
information monthly.
E.
The Administration Department is responsible for recording
completed construction projects in the completed year.
F.
When a department retires or transfers out an asset,
the Department Head is responsible for completion of an asset retirement/transfer
form. Administration is to receive a copy.
G.
The fixed asset retirement/transfer form shall include
the following information:
(1)
Asset number. This is the number that is assigned
to the asset. There should be a tag on the asset with the number printed
on it.
(2)
Asset description. The description should be detailed
and should include year, model, model number, color, make, type and
other pertinent information relating to the asset.
(3)
Department. This line refers to the department retiring
or otherwise changing the asset.
(4)
Date of change. This is the date the change took place.
(5)
Type of change. The Department Head should state whether
the asset was sold, transferred, destroyed or traded in.
(6)
If sold, amount of sale. Amount received if asset
was sold. A copy of the cash receipt should be attached in this case.
(7)
If transferred, new department. Department receiving
the asset.
(8)
New location. New location in which the asset will
be stored or used.
(9)
If traded in, amount of trade in. Amount of trade-in
allowance received if asset was traded in on a new item.
(10)
New item. Description of new item that trade
was applied towards.
(11)
If destroyed, insurance compensation. Amount
of compensation received from insurance, if the asset was destroyed
as the result of an accident. A copy of the cash receipt should be
attached in this case.
(12)
Description of destruction. How the asset was
destroyed, examples would include junked, totaled in accident, stolen.
(13)
The asset identification tag should be removed
before selling, destroying or trading in an asset and should be placed
on the retirement/transfer form.
H.
The asset retirement/transfer form should be signed
by the Department Head.
I.
Administration should input asset retirement/transfer
form information monthly.
J.
An annual report will be provided and a physical inventory
taken of all fixed assets. The physical inventory will be a function
of each department. Department Heads will be required to sign a form
that the listing for their department has been verified and is complete
and accurate.
A.
It will be the responsibility of the Administration
Department to value fixed assets based on generally accepted accounting
principles.
B.
For fixed assets that are purchased, cost will be
based on the invoice plus additional costs of preparing the asset
for use. Trade-in values will not be used to reduce the carrying cost
of the new asset.
C.
Assets purchased under a lease or installment method
should be valued at the discounted present value of total payments.
Additional costs will include those necessary so the asset is ready
for use.
D.
For assets acquired by donation, cost will be fair
value on date of gift and any costs of preparing assets for use.
E.
Property acquired under eminent domain will have a
cost determined by the court plus any additional attorney fees, costs
associated with preparing land for intended use.
F.
The cost for assets acquired by forfeiture/seizure
are based on the fair market value on date of forfeiture/seizure and
additional cost associated with preparing the asset for intended use.
G.
For all fixed assets, the additional costs of preparing
the asset for intended use includes, but is not limited to, the following:
(1)
Land. Legal fees, appraisal and negotiation fees,
surveying fees, site preparation costs, demolition of unwanted structures
and damage payments;
(2)
Buildings and improvements. Architect fees, legal
fees, appraisers, costs of fixtures, damage claims, insurance premiums,
interest and related construction costs;
(3)
Machinery, equipment and furniture. Transportation
charges and installation costs;
(4)
Motor vehicles. Transportation charges, painting and
installation of additional equipment;
(5)
Park improvements. Physical improvements to park land
that are not removable or do not increase the value of the land will
not be capitalized, including trails, parking areas, grading, aglimed
surfaces, drainage pipes, etc. Removable, replaceable fixtures or
buildings such as fencing, play equipment and picnic shelters will
be capitalized.
H.
It will be the responsibility of the Department Head
to inform the Administration Department of any additional cost associated
with an asset.
I.
January 1, 2004, asset listing were complied based
on a physical inventory taken by the Administration and Department
Heads, enterprise fixed assets listing were reconciled to audit work
papers. Values were determined as follows:
J.
Assets acquired December 31, 2003, or earlier had
a minimum valuation of $1,000 to be considered a fixed asset.
No asset owned by the City shall be sold to
an officer or employee of the City unless the sale conforms to Minnesota
State Statute 15.054, as amended from time to time. Property, except
real property, may be sold to an employee after reasonable public
notice at a public auction or by sealed bid, if the employee is the
highest bidder and is not directly involved in the auction sealed
bid process.
Depreciation will be calculated using the straight-line
method over the estimated useful life of assets. One-half year depreciation
will be taken for the year of acquisition and 1/2 year of depreciation
will be taken in the year of disposition (unless the asset is fully
depreciated). Standard estimated useful lives are as follows:
|
Years
| |
|---|---|
|
Lift stations
|
50
|
|
Sanitary sewer mains
|
40
|
|
Water mains
|
40
|
|
Storm sewer mains
|
40
|
|
Sump pump lines
|
40
|
|
Buildings
|
40
|
|
Concrete curb and gutter
|
30
|
|
Sidewalks
|
30
|
|
Wells and pump houses
|
25
|
|
Water meters
|
20
|
|
Office equipment
|
10
|
|
Computer equipment and software
|
5
|
|
Vehicles
|
5
|
|
Machinery, equipment, radios, phones
|
10
|
|
Land
|
Not depreciated
|
