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HomeMy WebLinkAboutB 14.0 Fixed Asset Capitalization 2001-06-25 �`; � t — �a CITY OF GRAPEVINE SECTION B � ADMI1vI5TRATIVE FOLICY NUMBER 14 sua��cr: FiXED ASSET CAP(TALIZATION PAGE 1 of 4 PREPaR��sY: ADNIINiSTRATIVE SERViCES EFFECTIVE DATE G-25-01 PURPQSE To establish a unifarm and consistent standard for the capitalization of fixed assets owned by the City of Grapevine; Texas. PR4CEDURE The capitalization threshold amount for fixed assets will,be determined by the estimated usefui life and.the cost of the item. Costs include ancillary costs as defined for�each item type belaw. ltems that are acguired that have a cost less than the threshold amounts are not ta be classifted as fixed assets for financial statement purposes; but, City departments are responsible for controlling and tracking these items. .Items�having - - � a value beiow'the��threshold will :be-grouped as rninor machinery, equipment, prin#ers . � and fixtures fbr accounting and fixed asset purposes. � . , � �. - . .. : ,.--� Group purchases and bulk purchases in excess of the threshold amounts will be ` _` ' capitalized if the individuai items each cost in excess of the guideline. Computer eguipment acquir�d as a workstation will not be subject to itemization on the initial purchase. Danated assets.will be recorded at the estimated fair market value of the asset at the time the gift is made to the City. Assets acquired by one operating fund of the City and owned or managed .by another operating fund of fhe 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. A. ltems costing in excess of$5,000, Prepaid items — Charges entered for benefits not yet received. (For example — prepaid rent, unexpired insurance premiums, bond issue cost and rate studies.} Constructian ln Progress — A temporary grouping of asset cosfis and capitalized interest for assets being built ar constructed, that are not anticipated to be completed by the end of the current fiscal year. On completion ofi construct�an of the assefi, it wif! be classi�ed as a permansnt asset in the apprapriate category as listed below, in the year in which the construction is completed. � -- � / - CITY OF GRAPEVINE SECTION B . � � , t � ADMINISTRATIVE POLICY N�Mg�R 14 sus�ecT: FIXED ASSET CAPiTAL.iZATION PA�E 2 of 4 PREPAftED BY: ADMINISTRATtVE SERVICES EFFECTIVE DATE �-�S-O'� Land and Easements — Includes the initial acquisition cost or donation value af land and easements, including costs for title searct�es, abstrac#s, assessments, surveys, recording of deeds, appraisals, liens assumed and taxes assumed. � L.and 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. Buildings/and Additions to Buildings — Includes the purchase price or danated value of buildings or structures plus related casts of attarney's fees, architect's fees, inspection fees, building permits and related costs. .. _ ,, .. ... . : � �-� � � Improvemenfs�otlier than Buildings. -:_Facilitie.s...and. improvements. to la�nd.that add . , value fo the property or far leasehald improvements that are permanent under an operating lease. Examples of such improvements include swimming pools, tennis �"�� courts, sidewalks, pat'sos, meeting areas and the like. Machinery and Equipment, Furniture and Fixtures — Praperty that does not lose its identity when removed from a locatian and is not changed materially or consumed within a twa-year periad. Ancillary costs in addition to the individual cast or donations thereafi include: freight charges, installation costs, setup costs and related expenses. Motor Vehicles — Costs incurred for the acquisition af self-propelled vehicles that are licensed ta operate by the State af Texas. Acquisition casts �include delivery charges, permanent attachments that ar� not removable and setup charges. B. Computer Equipment costing in exc�ss af$5,000. The capitalizatian threshold for computer equipment is an initia! cost of �5,000. The initial cost of personal computers includes monitors, keyboards, printers and related persona! camputer equipment necessary to have a functianing workstatian. � - �� CITY OF GRAPEVINE sECTiaN B ADMIr1I5TRATIVE POLICY NUb1BER �a sus�ecr: FIXED ASSET CAPITALIZATtON PAGE 3 of 4 � PR�paR�o sY: ADMtNISTRATIVE SERVICES EFFECi'IVE DATE 6-2S-O'I Enhancements, hardware .upgrades, memory expansions, cabling, ch�nge out of parts, saftware upgrades and other such cost items rela#ed to personal camputer installations are not cansidered part of the initial cost. These items are classified as either maintenance ar software services. C. lnfrastructure Improvements costing in excess of$50,000. Infrastruc#ure lmprovements — Public domain assets, either purchased ar donated, that have a useful life greater than two years and which are normally stationary and which generally have a useful life considerably langer than the capital assets listed above. This includes such assets as roads, bridges, curb and gutter, streets, � . � sidewaiks, drainage systems, sewe.r,systems,.utility,fine,extension and stand-alone .. �, lighting. . _ , . � . . _ :. �. _� D. Repair and Maintenance. � > . � Repair and maintenance costs of the above listed fixed asset/capitalized items are expenses.required tci keep a capitalized asset in its designed working condifiion far its current usefu! life and not to be cansidered as a fixed asset. E. Replacement of Capitalized Assets Items that are initia!!y accounted for and classified as capitalized assets would be ciassified as capitalized assets upon replacement if the initiai asset can be identified and a fixed asset deletion form is submitted ta delete the original asset. Replacement of existing assets wauld be accounted far as a deletion of old asset and addition of new asset. • Trade-in allowances are part ofi the cost of any new assef. V � I �' �; CITY OF GRAPEVINE SECTION B . ADMIl'�TISTRATIVE POLICY NUMBER �a SUBJECT: FIXED ASSET CAPITAL.IZATiON PAGE 4 of 4 PRePAR�Q�Y: ADMINISTRATtVE SERVICES EFFECTIVE DATE $-25-01 F. Repair, Maintenance, Operating Supply vs. Fixed Asset Additions/Definitians Repairs, maintenance, operating supply are expenses that do not materially add , value or prolang the useful life of an item. These are less than 2C}°la of initial cost andlar 20% of useful life. Capital Expense (Fixed Asset) expenses that add value and/or prolang the useful life of an item are greater than 20°!0 of initial cast andlar 20°lfl of useful life. Capital expenses include the ancillary items in addition to the initial purchase. � , r.----. � , , . , .