(A)   Established.  There is hereby established a fixed asset capitalization policy for the city which policy shall read and provide as follows.
   (B)   Definitions.  For the purpose of this subchapter, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
         (a)   Land, land improvements, including monuments, buildings, building improvements, construction in progress, machinery and equipment, vehicles and infrastructure.  All land will be capitalized but not depreciated.  All items with a useful like of more than one year, and having a unit cost of $5,000 or more shall be capitalized (including acquisitions by lease-purchase agreements or donated items).  A capital asset meeting the criteria will be reported and depreciated in the government-wide financial statements.
         (b)   Assets that are not capitalized (items having a unit cost of less than $5,000 are expensed in the year of acquisition.  An inventory will be kept on all computers and other equipment with a capitalized cost of less than $5,000.  Exceptions are:
            1.   Items costing less than the above-described limits which are permanently installed as a part of the cost of original construction or installation of a larger building or equipment unit will be included in the cost of the larger unit;
            2.   Modular equipment added subsequent to original equipment construction of a larger building or equipment unit which may be put together to form larger units costing more than the prescribed limits will be charged to capital assets even though the cost of individual items are less than such limits; and
            3.   Cabinets, shelving bookcases, and similar items added subsequent to original construction, which are custom-made for a specific place and adaptable elsewhere will be capitalized.
         (c)   Note: purchases made using grant funds must comply with grant requirements or the above procedures, whichever is most restrictive.
      CAPITAL OUTLAYS.  Expenditures which benefit both the 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 city’s general fixed assets.
      ENTERPRISE FUNDS.  Those funds used to account for operations that:
         (a)   Are financed and operated in a manner similar to private business enterprise where the intent of the City Council 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 City Council has decided that periodic determination of revenues earned, expenses incurred, and/or income is appropriate for capital maintenance, public policy, management control, accountability and other purposes.
         (c)   The Enterprise Fund of the city shall include the municipally-owned water and wastewater utilities.  Operation of the utilities shall require Enterprise Fund accounting and reporting.
      FIXED ASSETS.  Tangible assets of a durable nature employed in the operating of activities of the city and are relatively permanent and are needed for the production and sale of goods or services are termed property, plant and equipment or fixed assets.
      HISTORICAL COST.  The cash equivalent price exchanged for 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.
      TANGIBLE ASSETS.  Assets that can be observed by one or more of the physical senses.  These assets may be seen and touched and, in some environment, heard and smelled.
(Ord. 829-2013, passed 2-11-2013)