(A) The town will be depreciating capital assets, except roads/streets, by using either the composite/group method of depreciation or the straight-line method. There will be no salvage value. Composite depreciation refers to calculating depreciation for a collection of dissimilar assets, while group depreciation is for similar assets. A single composite rate is applied annually to the acquisition cost of the collection as a whole. When an asset is disposed of or sold, the asset is removed from the group and the accumulated depreciation associated with that asset is also removed. A gain or loss will never be reported on the asset when using the composite method.
(B) A full year’s depreciation will be taken when the asset is placed in service and no depreciation recorded in the year it is sold or disposed of. Depreciation will be calculated at year end. Dissimilar assets will be grouped by useful lives and similar assets by networks. Land is not depreciated according to generally accepted accounting principles.
(C) The following is the list of groups used for depreciation:
(1) Street lights;
(2) Street signs;
(3) Traffic signals; and
(4) Flood walls.
(D) All assets accounted for in GFAMS computer program will be depreciated using the straight-line method of depreciation. The following is a list of useful lives:
(1) Vehicles: Five years;
(2) Office equipment: Five years;
(3) Heavy equipment: Ten years;
(4) Fire trucks: 15 years;
(5) Buildings: 40 years;
(6) HVAC systems, roofing: 20 years;
(7) Land improvements, structure (parking lots, sidewalks, fencing): 20 years;
(8) Land improvements, ground work (golf course, ball field, landscaping): 20 years; and
(9) Grounds equipment (mowers, tractors, attachments): 15 years.
(E) Roads and streets will be based on the modified approach. The modified approach is an alternative to depreciation. It can be used on infrastructure assets that are a part of a network or subsystem. There are two requirements that must be met in order to follow the modified approach. First, the assets should be managed using an asset management system. Second, the government should document that the assets are being preserved at or above a condition level established by the government. A team of town engineers with experience in road condition assessments will perform a review of one-third of the roads, streets and alleys annually to determine the condition level. Through this process, every road, street and alley in the town will be reviewed in a three-year period. The town will ensure the arterial and residential roads, streets and alleys will be maintained.
(Res. 9, passed 7-20-2004)