(A) To be considered a capital asset for financial reporting purposes, an item must, at the time of acquisition, be valued for accounting and financial reporting purpose at a unit value greater than or equal to $5,000 (also $5,000 if funded through a federal grant).
(B) Assets shall remain as part of the property record until they are retired, sold, traded or otherwise disposed of regardless of their net book value amount.
(C) The capitalization threshold for the following classes of assets shall be:
(1) Land: N/A;
(2) Improvements to land: $10,000;
(3) Buildings: $25,000;
(4) Furnishings and equipment and vehicles: $5,000;
(5) Federal grant furnishings and equipment: $5,000;
(6) Computer software: $10,000;
(7) General infrastructure: $25,000; and
(8) Construction in progress: N/A.
(D) With regard to improvements to buildings and general infrastructure, a capital outlay must be significant and increase capacity, increase efficiency or extend the asset’s estimated useful life beyond what was originally estimated.
(E) (1) A CHANGE IN CAPACITY increases the level of service provided by the asset. A CHANGE IN EFFICIENCY either increases the level of service asset or the change maintains the same level of service at a lower cost.
(2) For example, an addition to a building provides increased square footage; hence, the capacity is increased and the capital outlay is capitalized. Widening a road with additional lanes increases capacity; hence, the capital outlay is capitalized. An extended estimated useful life will result from a significant alternation, structural change or improvement.
(F) While substantial repairs and renovations shall be reviewed for potential capitalization, it is anticipated that most will be expensed in the current year. These expenses often merely restore the asset to its original service potential but do not necessarily improve the asset.
(G) All land, including rights-of-way, shall be capitalized at the time of acquisition. If donated, it shall be recorded at its estimated acquisition value.
(Ord. 2020-02, passed 8-3-2020)