For the purpose of this chapter, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
BUILDINGS.
(1) Buildings are structures designed to house personnel or equipment.
(2) A department will capitalize buildings at full cost with no subcategories for tracking attachments such as roofs, heating, cooling, plumbing, lighting, sprinkling systems, or any part of the basic building. Each department will include the cost of items designed or purchased exclusively for the building.
(3) A department’s new building will be capitalized only if it meets the following conditions:
(a) The total cost exceeds $5,000; and
(b) The useful life is greater than two years.
(4) A department improving or renovating an existing building will capitalize the cost only if the results meet the following conditions:
(a) The total cost meets or exceeds $5,000; and
(b) The useful life is extended two or more years.
(5) A department will record donated buildings at fair market value plus associated costs on the date of transfer.
(6) Building purchases made using federal or state funding will follow the source funding policies and above procedures.
CAPITAL OUTLAYS. Expenditures which benefit both the current and future fiscal periods. This includes costs of acquiring land or structures; construction or improvements of buildings, structures or other fixed assets; infrastructure, machinery and equipment 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.
CONSTRUCTION IN PROGRESS.
(1) Assets included under this item type are those buildings or improvements other than buildings that are not completed at the end of a fiscal year. These assets will be included with noted payments and dates, including change orders for all services and materials necessary for the preparation of the building or improvement other than building for its intended purpose.
(2) The town will capitalize construction in progress if the results meet the following conditions:
(a) The total cost exceeds $5,000; and
(b) The asset’s useful life is extended two or more years.
(3) A department will record donated construction in progress at fair market value plus associated costs on the date of transfer.
(4) Construction in progress purchases made using federal or state funding will follow the source funding policies and above procedures.
ENTERPRISE FUNDS. Those funds used to account for operations (1) that are 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 (2) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability and other purposes. The enterprise funds of the Town of Kouts, Indiana shall include the municipally owned water and sewer utilities.
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 and 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 (such as land, buildings, improvements other than buildings, machinery and equipment, furniture and fixtures).
HISTORICAL COST. The cash equivalent price exchanged for goods or services at the date of acquisition. Land, buildings, equipment, improvements other than buildings and construction in progress are common examples of assets recognized under the historical cost attribute.
IMPROVEMENTS OTHER THAN BUILDINGS.
(1) The definition of this group of assets is improvements to land for better enjoyment, attached or not easily removed, and with a life expectancy of more than two years.
(2) Examples are walks, fencing, retaining walls, pools, outside fountains, planters, underground sprinkling systems and other related items.
(3) The town will capitalize new improvements or renovations to existing improvements if the results meet the following conditions:
(a) The total cost exceeds $5,000; and
(b) The asset’s useful life is extended two or more years.
(4) A department will record donated improvements other than buildings at fair market value plus associated costs on the date of transfer.
(5) Improvements other than buildings purchases made using federal or state funding will follow the source funding policies and above procedures.
INFRASTRUCTURE.
(1) Infrastructures are streets, curbs, water lines, sidewalks, and sewer lines. The town will capitalize streets, curbs, water lines, and sewer lines. The known or estimated historical costs of infrastructures will be included. Depreciated value estimates for water and sewer utility infrastructures will be reported.
(2) A department will record donated land at fair market value plus associated costs on the date of transfer.
(3) Infrastructure purchases made using federal or state funding will follow the source funding policies and above procedures.
LAND.
(1) The town will capitalize all land purchases, regardless of cost. Original cost of land will include the full value given to the seller, 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 workers [salary and benefits]), such as demolishing buildings, excavating, clean up and inspections. Known or estimated costs of right of ways for town streets shall be included.
(2) A department will record donated land at fair market value on the date of transfer plus associated costs.
(3) Purchases made using federal or state funding will follow the source funding policies and above procedures.
MACHINERY AND EQUIPMENT.
(1) The definition of machinery and equipment is: an apparatus, tool, or conglomerate of components 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 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 equal to or greater than the above mentioned limit will be included as one unit.
(3) Shipping charges, consultant fees, and any other costs directly associated with the purchase, delivery, or set up, (including contractors and/or town workers [salary and benefits], which make 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 result of the change meets all of the following conditions:
(a) Total cost is $5,000 or more;
(b) The useful life is extended by two or more years.
(5) A department will record donated machinery and equipment at fair market value plus any associated costs on the date of transfer.
(6) Machinery and equipment purchases made using federal or state funding will follow the source funding policies and above procedures.
TANGIBLE ASSETS. Assets that can be observed by one or more of the physical senses. They may be seen and touched and, in some environments, heard and smelled.
(Ord. 2007-7, passed 6-18-07)