(A) Classification of assets. Capital assets are personal and real property used in the operations of the county that have an expected estimated useful life beyond a single period. Capital assets are to include any item that falls into one of the following state categories:
(1) Buildings;
(2) Construction work in progress;
(3) Equipment;
(4) Improvements other than buildings;
(5) Infrastructure; and
(6) Land.
(B) Capitalization thresholds.
(1) To be considered a capital asset for financial reporting purposes, an item (other than land) must be at or above the capitalization threshold and have a unit historical cost of $1,000 or more. The capitalization threshold for all assets is $1,000, regardless of classification.
(2) With regard to improvements and buildings and general infrastructure, a capital outlay must be significant and increase capacity, increase efficiency or extend the asset's estimated useful life beyond the original expectation.
(3) A change in capacity increases the level of service provided by the asset. A change in efficiency increases the level of service but without increasing the size of the asset or the change maintains the same level of service at a lower cost.
(4) 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 and hence, the capital outlay is capitalized. An extended estimated useful life involves a significant alteration, structural change or improvement.
(5) While substantial repairs and renovations will be reviewed for potential capitalization, it is anticipated that most will be expenses in the current year. These expenses often merely restore the asset to the original service potential but do not necessarily improve the asset.
(6) All land, including rights-of-way, is capitalized at the time of acquisition regardless of historical costs or fair value if donated.
(C) Historical cost or estimated historical costs.
(1) Prospective reporting. Capital assets are recorded at historical cost which includes any ancillary charges necessary to place the asset into its intended location and condition for use. Ancillary charges include, for example, freight and transportation charges, site preparation costs, and professional fees. Engineering costs (internal and external) include related preliminary project and environmental studies; project estimating, design, and planning (drawings and specifications); and construction engineering, construction management, construction inspection and project payment. Donated capital assets are recorded at their estimated fair value at the time of acquisition.
(2) Retroactive reporting. When actual historical cost source data was unavailable, estimated historical cost was developed utilizing a normal costing approach. With this method of estimating historical cost, a current replacement cost was ascertained. An appropriate cost index (including Consumer Price Index and Federal Highway Price Trends) corresponding to an estimated date of acquisition/construction was then applied to 'deflate' the replacement cost to an estimated historical cost.
(D) Estimated useful lives of depreciable assets. Capital assets have estimated useful lives extending beyond a single reporting period (one year) and are depreciated using the straight-line method with no allowance for salvage value. The estimated useful lives currently used were developed with the input of knowledgeable staff and reflect our government's experience with these assets:
Land and Improvements to Land | Non- depreciable |
Buildings and improvements to buildings | 50 years |
Machinery and equipment | 3 - 25 years |
General infrastructure | |
Roads | 50 years |
Bridges | 75 years |
Drains | 50 years |
(E) Depreciation method/convention. Depreciation will be calculated using the straight-line method on a daily basis. No salvage value or residual value will be recognized.
(F) Retirements.
(1) Retirements apply to all capital assets including land, buildings, machinery and equipment, vehicles and general infrastructure.
(2) When an asset is disposed of, scrapped, sold, subject to demolition, etc., it is to be removed from the property record and the appropriate reduction will be made to historical cost, accumulated depreciation, and net book value amounts.
(3) Retirements will reflect the actual historical cost of the asset when the amount is ascertainable. When historical cost is not ascertainable, an estimated historical cost will be determined.
(G) Responsibility for property record maintenance.
(1) Department heads are the stewards for each piece of property utilized by their department. The steward will be the focal point for questions for availability, condition, and usage of the asset.
(2) The steward shall be designated as the person to record the receipt of the asset, to examine the asset to make sure no damage was incurred during shipment, and to make sure the asset was received in working order. The steward is also responsible for arranging the necessary preventative maintenance and any needed repairs to keep the asset in working condition. The steward also ensures that the asset is used for the purpose for which it was acquired and that there is no personal or unauthorized use. The steward is responsible for reporting any loss, theft, or damage to the assets.
(Res. 2018 BCCR-14, passed 8-6-18; Am. Res. 2023-BCCR-4, passed 3-20-23)