(A) Purpose. This capital asset policy will be effective upon adoption. The purpose of this policy is to facilitate the preparation of financial statements in conformity with generally accepted accounting principles.
(B) 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 categories:
(1) Land;
(2) Building and building improvements;
(3) Machinery and equipment;
(4) Vehicles;
(5) Computer software;
(6) General infrastructure (roads, bridges, and rights-of-way); or
(7) Construction in progress.
(C) Capitalization thresholds.
(1) To be considered a capital asset for financial reporting purposes, an item must be at or above the capitalization threshold and have a unit historical cost of $5,000 or more, as well as all computers (laptops, notebooks and tablets), printers, copiers, and emergency radios.
(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 right-of-ways, is capitalized at the time of acquisition regardless of historical costs or fair value if donated.
(D) 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 at transition of GASB statement 34. When actual historical cost source data is unavailable, estimated historical cost is developed utilizing a normal cost approach. With this method of estimating historical cost, a current replacement cost is ascertained. An appropriate cost index (including Consumer Price Index and Federal Highway Price Trends) corresponding to an estimated date of acquisition/construction is then applied to lower the replacement cost more in line with an estimated historical cost.
(E) Estimated useful years 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 life of assets 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 |
Land and Improvements to Land | Non-Depreciable |
Buildings and Building Improvements | 50 Years |
Machinery and Equipment | 5 Years |
Vehicles - Automobiles | 5 Years |
Light Trucks | 8 Years |
Heavy Trucks | 15 Years |
General | |
Infrastructure Roads | 50 Years |
Bridges | 75 Years |
Outdoor Lighting | 10 Years |
Software | 5 Years |
(F) Depreciation method / convention. Depreciation will be calculated using the straight-line method and full-year convention. No salvage value or residual value will be recognized.
(G) 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.
(H) Responsibility for property record maintenance.
(1) The Ripley County Auditor will ensure that reporting for capital assets is being exercised by establishing a capital asset inventory, both initially and periodically in subsequent years. The Ripley County Auditor will further ensure that the capital asset report will be updated annually to reflect improvements, additions, retirements, and transfers and to reflect the new annual capital asset balance for financial reporting purposes and the annual and accumulated depreciation calculations and net book value amounts.
(2) Day-to-day stewardship of all personal property is the expressed responsibility of the department/office and/or department head/office holder utilizing the property.
(3) For annual updating of the capital asset report, the departments/offices have the responsibility to report improvements, additions, retirements, and transfers in detail to the Ripley County Auditor. It is expected that this reporting will be in a timely manner, as the capital asset record must be updated annually.
(I) Property control.
(1) Capital assets above and below the capitalization threshold of $5,000, on a unit basis but warranting “control” shall be inventoried at the department level and an appropriate list will be maintained. Data elements are to include asset description, location, make, mode, serial number, and other information that assists control or deemed relevant.
(2) The Ripley County Auditor shall determine appropriate means, level of detailed data elements, and the system to be utilized. Finally, the Ripley County Auditor shall have the right to request copies of the inventory and/or updated inventory of controllable items so as to periodically review the information and adhere to policy.
(Res. 2021-05, passed 10-4-2021)