"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 government's general fixed assets.
(A) LAND
(1) This town will capitalize all land purchases, regardless of the cost.
(2) Exception to land capitalization are land purchased outright, as easements, or rights-of-way for infrastructure. Examples of infrastructures are roads and streets, street lighting systems, bridges, overpasses, sidewalks, curbs, parking meters, street signs, viaducts, wharfs, and storm water collection.
(3) Original cost of land will include the full value given to the seller, including 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/or inspection).
(4) A department will record donated land at fair market value on the date of transfer plus any associated costs.
(5) Purchases made using federal or state funding will follow the source funding policies and above procedures.
(B) MACHINERY AND EQUIPMENT
(1) The definition of machinery and equipment is: an apparatus, tool, or conglomeration of pieces to form a tool. The tool will stand alone and not become a part of a basic structure or building.
(2) This town will capitalize and tag items with an individual value equal to or greater than $100. Machinery combined with other machinery to form one unit with a total value greater than the above-mentioned limit will be 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 makes 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 costs exceed $100;
(b) The useful life is extended two or more years; and
(c) The total cost will be greater than the current book value and less than the fair market value.
(5) Examples include:
(a) A work truck being equipped with screens, lights or radios for use as a single unit throughout its life expectancy is considered one unit.
(b) If police cars are constantly changing light bars or radios to other vehicles, the town will capitalize each piece of equipment separately, if it meets the required dollar amount.
(c) A department's computer (CPU, monitor, keyboard, and printer) is considered one unit.
(6) A department will record donated machinery and equipment at fair market value on the date of transfer with any associated costs.
(7) Purchases made using federal or state funding will follow the source funding policies and above procedures.
(C) BUILDINGS
(1) A department will capitalize buildings at full cost with no subcategories for tracking the cost of attachments. Examples of attachments are roofs, heating, cooling, plumbing, lighting, or sprinkler systems, or any part of the basic building. The department will include the cost of items designed or purchased exclusively for the building.
(2) A department's new building will be capitalized only if it meets the following conditions:
(a) The total cost exceeds $1,000; and
(b) The useful life is greater than two years.
(3) A department improving or renovating an existing building will capitalize the cost only if the result meets all of the following conditions:
(a) The total cost exceeds $1,000;
(b) The useful life is extended two or more years; and
(c) The total cost will be greater than the current book value and less than the fair market value.
(4) Capital building costs will include preparation of land for the building, architectural and engineering fees, bond issuance fees, interest cost (while under construction), accounting costs if material, and any costs directly attributable to the construction of a building.
(5) A department will record donated buildings at fair market value on the date of transfer with any associated costs.
(6) Purchases made using federal or state funding will follow the source funding policies and above procedures.
(D) IMPROVEMENTS OTHER THAN BUILDINGS
(1) The definition of this group is improvements to land for better enjoyment, attached or not easily removed, and will have a life expectancy of greater than two years.
(2) Examples are walks, parking areas and drives, golf cart paths, fencing, retaining walls, pools, outside fountains, planter underground sprinkler systems, and other similar items.
(3) Improvements do not include roads, streets, or assets that are of value only to the public. For example, Main Street is a public street with greatest value to the public. Roads or drives upon town-owned land that provide support to our facilities are assets. A sidewalk down the road for public enjoyment is an infrastructure improvement and is not capitalized. However, sidewalks installed upon town-owned land for use by the public and for the support of our facility are capital assets.
(4) This town will capitalize new improvements other than buildings only if it meets the following conditions:
(a) The total cost exceeds $1,000; and
(b) The useful life is greater than two years.
(5) A department will capitalize improvements or renovations to existing improvements other than buildings only if the result meets the following conditions:
(a) The total cost exceeds $1,000;
(b) The useful life is extended two or more years; and
(c) The total cost will be greater than the current book value and less than the fair market value.
(6) A department's donated improvements other than buildings will be recorded at fair market value on the date of transfer with any associated costs.
(7) 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:
(A) 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
(B) 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 shall include the municipally owned water and electric utilities. Operation of these utilities shall require enterprise fund accounting and reporting.
"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 or 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 item (e.g. 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 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 physical senses. They may be seen and touched and, in some environments, heard and smelled.
(Ord. 1998-08, passed 7-14-98)