For the purpose of this subchapter, the following definitions shall apply unless the context clearly indicates, or requires, a different meaning.
BUILDINGS.
(1) A department will capitalize buildings at full cost with no subcategories for tracking the cost of attachments. Examples of attachments are roof, heating, cooling, plumbing, lighting or sprinkler systems, or any part of the basic BUILDING. The department will include the cost of items designed or purchased exclusively for the building.
(2) A department’s new BUILDING will be capitalized only if it meets the following conditions.
(a) The total costs exceeds $10,000.
(b) The useful life is greater than five years.
(3) A department improving or renovating an existing building will capitalize the costs only if the results meet all the following conditions.
(a) The total cost exceeds $10,000.
(b) The useful life is extended five or more years.
(c) The total cost will be greater than the current book value and less than the fair market value.
(4) Capital BUILDING costs will include preparation of land for the building, architectural and engineering fees, bond issuance fees, interest costs (while under construction), accounting cost if material, and any costs directly attributable to the construction of the building.
(5) A department will record donated buildings at fair market value on the date of transfer with any associated costs.
(6) Purchases made with federal or state funding will follow the source funding policies and above procedures.
CAPITAL OUTLAYS. Expenditures which benefit both the current and the future fiscal periods. This includes the cost of acquiring land or structures, construction or improvement of buildings, structures, or other fixed assets, and equipment purchases having an appreciable and calculable period of usefulness. These are expenditures resulting in the acquisition of or addition to the government’s general fixed assets.
ENTERPRISE FUNDS.
(1) Those funds used to account for operations:
(a) Financed and operated in a manner similar to private business enterprise, where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or
(b) Where the governing body has decided that periodic determination or revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance public policy, management control, and other purposes.
(2) The enterprise funds of the town shall include the municipally owned water and sewage utilities.
(3) Operation of utilities shall require ENTERPRISE FUND accounting and reporting.
FIXED ASSETS. Tangible assets of a durable nature employed in the operating activities of the unit and that are relatively permanent and are needed for the production or sale of goods or services are termed property, plant, and equipment, or FIXED ASSETS. These assets are not held for sale in the ordinary course of business. This broad group is usually separated into classes according to the physical characteristics of the items (for example, land, buildings, improvements other than buildings, machinery and equipment, furniture, and fixtures).
HISTORICAL COSTS. The cash equivalent price for exchanged goods or services at the date of acquisition. Land, buildings, equipment, and most inventories are common examples of items recognized under the HISTORICAL COST attribute.
IMPROVEMENTS OTHER THAN BUILDINGS.
(1) The definition of this group is improvements to land for better enjoyment, attached or not easily removed, and will have a life expectancy of greater than five years.
(2) Examples of this are walks, parking areas and drives, golf club paths, fencing, retaining walls, pools, outside fountains, planter underground sprinkler systems, and other similar items.
(3) IMPROVEMENTS do not include roads, streets, or assets that are of value only to the public. For example, Main Street is a public street with greatest value to the public. Roads or drives upon town-owned land that provide support to facilities are assets. A sidewalk down the road for public enjoyment is an infrastructure improvement and is not capitalized. However, sidewalks installed upon town-owned land for use by the public and for the support of town facilities are capital assets.
(4) The town will capitalize new improvements other than buildings only if it meets the following conditions.
(a) The total cost exceeds $10,000.
(b) The useful life is greater than five years.
(5) A department will capitalize IMPROVEMENTS or renovations to existing improvements other than buildings only if the result meets the following conditions:
(a) The total cost exceeds $10,000.
(b) The assets useful life is extended five or more years.
(c) The total cost will be greater than the current book value and less than the fair market value.
(6) A department’s donated IMPROVEMENTS OTHER THAN BUILDINGS will be recorded at fair market value on the date of transfer with any associated costs.
(7) Purchases made using federal or state funding will follow source funding policies and above procedures.
LAND.
(1) The town will capitalize all land purchases, regardless of cost.
(2) Exceptions to land capitalization are land purchase outright as easements, or right-of-way for infrastructure. Examples are roads and streets, street lighting systems, bridges, overpasses, sidewalks, curbs, parking meters, street signs, viaducts, and stormwater collection.
(3) Original cost of land will include the full value given to the seller, including relocation, legal services incidental to the purchase (including title work and opinion), appraisal and negotiation fees, surveying and costs for preparing the land for its intended purpose (including contractors and/or town employees (salary and benefits)), such as clean up, demolishing buildings, excavating, and/or inspection.
(4) A department will record donated land at fair market value on the date of transfer plus any associated costs.
(5) Purchases made using federal or state funding will follow the source funding policies and above procedures.
MACHINERY AND EQUIPMENT.
(1) An apparatus, tool, or conglomeration of pieces to form a tool. The tool will stand alone and not become a part of a basic structure or building.
(2) The town will capitalize and tag items with an individual value equal to or greater than $5,000. Machinery combined with other machinery to form one unit with a total value greater than the above mentioned limit will be one unit.
(3) Shipping charges, consultant fees, and any other cost directly associated with the purchase, delivery, or set-up, (including contractors and/or town works (salary and benefits)), which makes such equipment operable for its intended purpose will be capitalized.
(4) Improvements or renovations to existing MACHINERY AND EQUIPMENT will be capitalized only if the results meet all of the following conditions.
(a) Total costs exceed $5,000.
(b) Useful life is extended two or more years.
(c) Total costs will be greater than the current book value and less than the fair market value.
(5) Examples include:
(a) A work truck being equipped with screens, lights, or radios for use as a single unit through its life expectancy is considered one unit.
(b) If police cars are constantly changing light bars or radios to other vehicles, the town will capitalize each piece of equipment separately, if it meets the required dollar amount.
(c) A department’s computer (CPU, monitor, keyboard, and printer) is considered one unit.
(6) Departments will record donated MACHINERY AND EQUIPMENT at fair market value on the date of the transfer with any associated costs.
(7) Purchase made using federal or state funding will follow the source funding policies and above procedures.
(Prior Code, § 2.16.2)
TANGIBLE ASSETS. Assets that can be observed by one or more of the physical senses. They may be touched and in some environments heard and smelled.
(Prior Code, § 2.16.1) (Ord. 1996-6, passed 7-2-1996; Ord. 2001-4, passed 6-12-2001)