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HomeMy WebLinkAboutB09.0 Fixed Asset Capitalization �'l3llRl�ll `Y 111CJ- 1' E A S CITY OF GRAPEVINE ADMINISTRATIVE POLICY SUBJECT: FIXED ASSET SECTION: B NUMBER: 9.0 CAPITALIZATION PREPARED BY: Administrative Services REVISED DATE: 06/25/2001 PAGE: 1 of 4 PURPOSE 9.1 The purpose of the Fixed Asset Capitalization policy is to establish a uniform and consistent standard for the capitalization of fixed assets owned by the City of Grapevine. POLICY 9.2 The capitalization threshold amount for fixed assets will be determined by the estimated useful life and the cost of the item. Costs include ancillary costs as defined for each item type below. Items that are acquired that have a cost less than the threshold amounts are not to be classified as fixed assets for financial statement purposes; but, City departments are responsible for controlling and tracking these items. Items having a value below the threshold will be grouped as minor machinery, equipment, printers and fixtures for accounting and fixed asset purposes. 9.3 Group purchases and bulk purchases in excess of the threshold amounts will be capitalized if the individual items each cost in excess of the guideline. Computer equipment acquired as a workstation will not be subject to itemization on the initial purchase. Donated assets will be recorded at the estimated fair market value of the asset at the time the gift is made to the City. 9.4 Assets acquired by one operating fund of the City and owned or managed by another operating fund of the City for reimbursement and/or funding will acquire the asset at the fair market value or depreciated basis at the time of donation to the receiving fund. 9.5 Items Costing in Excess of $5,000: 9.5.1 Prepaid items — Charges entered for benefits not yet received. For example: o Prepaid rent o Unexpired insurance premiums o Bond issue cost o Rate studies �'l3llRl�ll `Y 111CJ- 1' E A S CITY OF GRAPEVINE ADMINISTRATIVE POLICY SUBJECT: FIXED ASSET SECTION: B NUMBER: 9.0 CAPITALIZATION PREPARED BY: Administrative Services REVISED DATE: 06/25/2001 PAGE: 2 of 4 9.6 Construction In Progress — A temporary grouping of asset costs and capitalized interest for assets being built or constructed, that are not anticipated to be completed by the end of the current fiscal year. On completion of construction of the asset, it will be classified as a permanent asset in the appropriate category as listed below, in the year in which the construction is completed. 9.7 Land and Easements — Includes the initial acquisition cost or donation value of land and easements, including costs for title searches, abstracts, assessments, surveys, recording of deeds, appraisals, liens assumed and taxes assumed. 9.8 Land Improvements — Costs incurred for the improvements to land. Such costs include leveling, grading, seeding, other landscaping costs, and other such items to finish the improvements. 9.9 Buildings/and Additions to Buildings — Includes the purchase price or donated value of buildings or structures plus related costs of attorney's fees, architect's fees, inspection fees, building permits and related costs. 9.10 Improvements other than Buildings— Facilities and improvements to land that add value to the property or for leasehold improvements that are permanent under an operating lease. Examples of such improvements include swimming pools, tennis courts, sidewalks, patios, meeting areas and the like. 9.11 Machinery and Equipment, Furniture and Fixtures— Property that does not lose its identity when removed from a location and is not changed materially or consumed within a two-year period. Ancillary costs in addition to the individual cost or donations thereof include: freight charges, installation costs, setup costs and related expenses. 9.12 Motor Vehicles—Costs incurred for the acquisition of self-propelled vehicles that are licensed to operate by the State of Texas. Acquisition costs include delivery charges, permanent attachments that are not removable and setup charges. �'l3llRl�ll `Y 111CJ- 1' E A S CITY OF GRAPEVINE ADMINISTRATIVE POLICY SUBJECT: FIXED ASSET SECTION: B NUMBER: 9.0 CAPITALIZATION PREPARED BY: Administrative Services REVISED DATE: 06/25/2001 PAGE: 3 of 4 9.13 Computer Equipment - Costing in excess of $5,000. 9.13.1 The capitalization threshold for computer equipment is an initial cost of $5,000. The initial cost of personal computers includes monitors, keyboards, printers and related personal computer equipment necessary to have a functioning workstation. 9.13.2 Enhancements, hardware upgrades, memory expansions, cabling, change out of parts, software upgrades and other such cost items related to personal computer installations are not considered part of the initial cost. These items are classified as either maintenance or software services. 9.14 Infrastructure Improvements Costing in Excess of $50,000: 9.14.1 Infrastructure Improvements— Public domain assets, either purchased or donated, that have a useful life greater than two years and which are normally stationary and which generally have a useful life considerably longer than the capital assets listed above. This includes such assets as roads, bridges, curb and gutter, streets, sidewalks, drainage systems, sewer systems, utility line extension and stand-alone lighting. 9.14.2 Repair and Maintenance - Cost of the above listed fixed asset capitalized items are expenses required to keep a capitalized asset in its designed working condition for its current useful life and not to be considered as a fixed asset. 9.14.3 Replacement of Capitalized Assets - Items that are initially accounted for and classified as capitalized assets would be classified as capitalized assets upon replacement if the initial asset can be identified and a fixed asset deletion form is submitted to delete the original asset. 9.14.4 Replacement of Existing Assets - Would be accounted for as a CITY OF GRAPEVINE ADMINISTRATIVE POLICY SUBJECT: FIXED ASSET SECTION. B NUMBER: 9.0 CAPITALIZATION PREPARED BY: Administrative Services REVISED DATE: 06/25/2001 PAGE: 4 of 4 deletion of old asset and addition of new asset. 9.14.5 Trade-in Allowances - Are part of the cost of any new asset. 9.14.6 Repair, Maintenance, and Operating Supply vs. Fixed Asset Additions/Definitions - Are expenses that do not materially add value or prolong the useful life of an item. These are less than 20% of initial cost and/or 20% of useful life. 9.14.7 Capital Expense (Fixed Asset) - Expenses that add value and/or prolong the useful life of an item are greater than 20% of initial cost and/or 20% of useful life. Capital expenses include the ancillary items in addition to the initial purchase.