(A) Definitions and provisions. For the purpose of this section, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
CAPITAL ASSET. An asset having a useful life of more than one year and an actual or historical cost of $5,000 or more. CAPITAL ASSETS include: land, easements, right-of-ways, land improvements, building, building improvements, construction in progress, machinery and equipment, vehicles, infrastructure, works of art and monuments, and all other tangible assets used in operations with useful lives extending beyond one year.
CAPITAL OUTLAYS. Expenditures that benefit both current and future fiscal periods. This includes costs 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.
FIXED ASSET. 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 that 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 (such as land, buildings, improvements other than buildings, machinery and equipment).
VALUATION OF CAPITAL ASSETS. Capital assets should be recorded at actual cost. Normally, the cost recorded is the purchase price or construction costs of the asset, but also included are any reasonable and necessary costs incurred to place the asset in its intended location and intended use that can be directly related to the asset. Such costs could include the following: legal and title fees; appraisal and negotiation fees; surveying fees; damage payments; land preparation costs; demolition costs; architect and accounting fees; insurance premiums during construction; transportation charges; and interest costs during construction. Donated or contributed assets should be recorded at their fair market value on the date donated or acquired.
(B) Asset definitions by major category. It is important to the maintenance of accurate records that each asset category be precisely defined and that all persons responsible for records maintenance be fully aware of the categorization system. This division further clarifies the asset definition by major category.
(1) Land.
(a) The county will capitalize all land purchases or land donations. All land purchases shall be capitalized with the actual cost of purchase or if unavailable, the estimated historical cost. This includes all specified land, easements, right-of-ways, lots, and parcels owned by the governmental unit or its various departments, boards or authorities, regardless of the method of acquisition. This includes land purchased outright as an easement or right-of-way to infrastructures. All costs of legal services incidental to the acquisition of land, costs relating to the razing for the structure, and other charges incurred in preparing the land for use are capitalized and carried in the land account. Donated land will be capitalized at the fair market value at the time of the donation.
(b) All properties obtained through tax sale including but not limited to land, buildings, land improvements, and building improvements shall be considered to have no dollar value and will be excluded from reporting as they are considered property that is being held for resale.
(2) Buildings.
(a) The county will capitalize all buildings at the purchase price or construction cost. Buildings are all structures designed and erected to house equipment, services or functions. This includes systems, services, and fixtures within the buildings, and attachments such as porches, stairs, fire escapes, canopies, areaways, lighting fixtures, flagpoles, and all such units that serve the building. Plumbing systems; lighting systems; heating, cooling, ventilating and air handling systems; alarm systems; sound systems; surveillance systems; passenger and freight elevators; escalators; built-in casework; walk-in coolers and freezers; fixed shelving; and other fixed equipment are included with the building. Communication antennas and/or towers are not included as buildings. These are parts of the equipment units they serve.
(b) Additions, improvements, and leasehold improvements to the building as well as the cost of the heating and ventilating system or other permanently attached fixtures should be capitalized when these costs are considered betterments. These improvements or renovations to the buildings will be capitalized in the county if the total cost is $5,000 or greater. Replacement of a building roof or heating and cooling system will be capitalized when the cost of the item is $5,000 or greater.
(c) Donated buildings will be capitalized using the market value of the building at the time of the donation. Building purchases made using the federal or state funding shall follow the appropriate funding source guidelines and the county capital asset policy.
(3) Improvements other than buildings. The county will capitalize improvements other than buildings in the following manner:
(a) Improvements such as excavation, non-infrastructure utility installation, driveways, parking lots, flagpoles, sidewalks, retaining walls, and fencing shall be capitalized when the cost of the item is $5,000 or greater.
(b) Milling and paving of an existing parking lot shall be considered maintenance rather than a capital asset.
(c) Improvements other than buildings will be capitalized at the actual cost of the improvement. If the actual cost is unavailable, the improvement will be capitalized using its current replacement cost, estimated date of purchase, and the Indiana Board of Accounts factoring table to determine the estimated historical cost.
(d) The county department heads shall report to the County Auditor any improvements other than buildings which their respective departments authorized that cost $5,000 or greater.
(e) Donated improvements other than buildings will be capitalized at the fair market value at the time of the donation.
(4) Construction work in progress. The county will capitalize actual amounts expended on an uncompleted building or other capital construction project. Once the project is completed, the cumulative costs are transferred to the appropriate permanent fixed asset account.
(5) Machinery and equipment.
(a) The county will capitalize all machinery and equipment at the purchase price or actual cost. The cost of the asset acquired when payment includes both cash and a trade-in is the sum of the cash paid plus the fair market value of the asset traded in. If the fair market value of the asset being traded in is not readily determinable, cost may be recorded as the cash paid plus the book value (asset cost minus accumulated depreciation) of the asset traded in.
(b) Equipment includes all types of physical property within the scope of the capital asset policy for the county not previously classified. Included in this category are office mechanical equipment, office furniture, appliances, furnishings, machinery items, maintenance equipment, communication equipment, police, fire, sanitation, Park Department equipment, laboratory equipment, vehicles, road and highway equipment, aircraft, EMS and emergency equipment, earth moving equipment, text equipment, civil defense and emergency equipment, and data processing equipment. All supplies are excluded.
(c) The county shall capitalize all machinery and equipment items with an actual cost or estimated cost of $5,000 or greater. Attachments to machinery and equipment will be capitalized if purchased at the same time as the equipment item. Attachments that are purchased separately from a given equipment item will be capitalized separately from the item if they are purchased at a time other than when the original item was purchased and have a cost of $5,000 or greater.
(d) Items which extend the useful life of the equipment shall be capitalized. Department heads should report to the County Auditor the description, year completed, funding source and dollar amount. An example would be the purchase of a motor for a vehicle. This does not include the normal maintenance costs or supplies.
(e) Donated machinery and equipment will be capitalized at the fair market value at the time of donation.
(6) Infrastructure.
(a) The county will capitalize all county-owned roads and bridges. All county roads and bridges will be capitalized at original cost or historical estimated cost. Infrastructure assets are long-lived capital assets that normally can be preserved for a significantly greater number of years than most capital assets and that are normally stationary in nature. Infrastructure assets include roads, bridges, streetlights, traffic signals, drainage systems and water systems. Maintenance and repairs will be considered as necessary to maintain the existing asset and therefore are not capitalized. Examples such as patching, resurfacing, milling, chip sealing, and snow removal shall be considered maintenance activities and will be expensed. Additionally, normal department operating activities, such as feasibility studies, and primary engineering and design will be expensed and not capitalized as an element of the infrastructure asset.
(b) Gravel roads that are paved shall be considered a capital asset. County roads that are redesigned or re-engineered beyond maintenance activities such as paving, milling, or chip sealing shall be considered a capital asset. Roads that are accepted by the Board of Commissioners and the Highway Department from developers or owners shall be capitalized at the market value at the time of the donation.
(C) Recording and accounting.
(1) The County Auditor shall ensure that accounting for capital assets is being exercised by establishing a capital asset inventory, both initially and periodically in subsequent years. The County Auditor will further ensure that the capital asset report shall be updated annually to reflect additions, retirements, and transfers and to reflect the new, annual capital asset balance for financial reporting purposes and the annual and accumulated depreciation calculation. The County Auditor shall be responsible for maintaining the records and accounts of all capital assets that have an actual cost or estimated historical costs of $5,000 or greater.
(2) The County Auditor will depreciate the capital assets of the county by using the straight-line method or the composite/group method of depreciation. Land is not depreciated according to general accepted accounting principles. Depreciable property must meet the following qualifications: the asset must have a useful life of more than one year and the asset must wear out or lose value over time.
(3) Useful life is defined for each asset class as follows:
(a) Land: not depreciated.
(b) Buildings: 50 years.
(c) Improvements other than buildings: 15 years.
(d) Construction work in progress: not depreciated.
(e) Machinery and equipment: ten years, unless otherwise specified below.
1. Distributer trucks and motor graders: 25 years.
2. Wheel loaders, dirt loaders, asphalt compactor rollers, snowplows, sanders, and chain saws: 20 years.
3. Sanitation trucks: 15 years.
4. Dump trucks, pickups, and excavators: ten years.
5. Boom mower and tractors: eight years.
6. Patrol cars: five years.
(f) Infrastructure assets.
1. Roads: 50 years.
2. Bridges: 75 years.
(4) Infrastructure record keeping and reconciliation.
(a) The County Highway Engineer shall be responsible for maintaining accurate records regarding all county infrastructure. If roads or bridges are permanently closed, or new roads are accepted into the county road system by the County Board of Commissioners, such changes shall be recorded by the County Auditor in the year that such changes occur. If a gravel road is paved, or if a road is totally redone beyond milling and paving, or chip sealing, such improvement shall be considered a capital asset if the cost is $5,000 or greater.
(b) Normal department operating activities regarding infrastructure, such as feasibility studies, preliminary engineering, and design, will be expensed rather than capitalized greater.
(D) Maintenance of assets. For the maintenance of the capital asset accounting report, the department heads have the responsibility to report additions, retirements, and transfers in detail to the County Auditor. Detail includes such data elements as asset description, location, make, model, serial number, date of acquisition, cost, life and other information deemed relevant. Reports shall be made in a timely manner, as the capital asset record must be updated annually. Property should not be transferred, turned in for auction or disposed of without the approval of the Board of Commissioners. Department heads shall report all disposed items to the County Auditor, who shall remove the item from the county capital asset inventory. All lost or stolen items shall be reported to the County Auditor by the department heads.
(E) Periodic inventories. A physical inventory of capital assets will be conducted by each department as near as practical to year-end. The County Auditor will provide a list of the inventory on file which will be sent to each department head before each year-end. The department heads will then compare physical observations of assets to the listing noting whether the assets exist, the location if not apparent otherwise, and relevant factors. If the condition of an asset has deteriorated to the point its useful life has been impaired, the fact should be noted, and the reasons for such omissions should be documented to the extent possible. Department heads shall be accountable for the capital asset inventory charged to their department. The physical capital asset inventory sheet and related documentation shall be forwarded to both the County Auditor and the Board of Commissioners. The County Auditor will compare the results of the physical inventory to the capital asset records and make necessary adjustments to the capital assets.
(Ord. 2021-33, passed 10-4-2021)