(A) Definitions. For the purpose of this section, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
BUILDINGS.
(a) 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.
(b) A department’s new BUILDING will be capitalized only if it meets the following conditions.
1. The total cost exceeds $5,000.
2. The useful life is extended two years.
(c) A department improving or renovating an existing BUILDING will capitalize that cost only if the result meets all of the following conditions.
1. The total cost exceeds $5,000.
2. The useful life is extended two or more years.
3. The total cost will be greater than the current book value, and less than the fair market value.
(d) 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.
(e) A department will record donated BUILDINGS at fair market value on the date of transfer with any associated costs.
(f) Purchases made using federal and 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 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.
ENTERPRISE FUNDS.
(a) 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 (expense, 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.
(b) The ENTERPRISE FUNDS of the county shall include the municipally-owned water and sewage 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 of 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 (for example, land, buildings, improvements other than buildings, machinery and equipment, furniture, and fixtures).
HISTORICAL COST. The cash equivalent price exchange 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.
IMPROVEMENTS OTHER THAN BUILDINGS.
(a) Improvements to land for better enjoyment, attached or not easily removed, and will have a life expectancy of greater than two years.
(b) Examples are: walks, parking areas and drives, golf cart paths, fencing, retaining walls, pools, outside fountains, planter underground sprinkler systems, and other similar items.
(c) 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 county-owned land that provide support to our facilities are assets. A sidewalk down the road or public enjoyment is an infrastructure improvement and is not capitalized. However, sidewalks installed upon county-owned land for use by the public and for the support of our facility are capital assets.
(d) This county will capitalize new IMPROVEMENTS OTHER THAN BUILDINGS only if it meets the following conditions.
1. The total cost exceeds $5,000.
2. The useful life is greater than two years.
(e) A department will capitalize improvements or renovations to existing IMPROVEMENTS OTHER THAN BUILDINGS only if the result meets the following conditions.
1. The total cost exceeds $5,000.
2. The asset’s useful life is extended two or more years.
3. The total cost will be greater than the current book value, and less than the fair market value.
(f) A department’s donated IMPROVEMENTS OTHER THAN BUILDINGS will be recorded at fair market value on the date of transfer with any associated costs.
(g) Purchases made using federal or state funding will follow the source funding policies and above procedures.
LAND.
(a) The county will capitalize all LAND purchases, regardless of cost.
(b) Exceptions 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 stormwater collections.
(c) 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 county workers, such as salary and benefits), such as demolishing buildings, excavating, clean up, and/or inspection.
(d) A department will record donated LAND at fair market value on the date of transfer, plus any associated costs.
(e) Purchases made using federal or state funding will follow the source funding policies and above procedures.
MACHINERY AND EQUIPMENT.
(a) 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.
(b) The county will capitalize and tag items with an individual value equal to or greater than $2,000. Machinery combined with other machinery to form one unit with a total value greater than the above-mentioned limit will be one unit.
(c) Shipping charges, consultant fees, and any other cost directly associated with the purchase, delivery, or set up (including contractors and/or county workers, such as salary and benefits), which makes such equipment operable for its intended purpose, will be capitalized.
(d) Improvements or renovations to existing MACHINERY AND EQUIPMENT will be capitalized only if the result of the change meets all of the following conditions.
1. The total cost exceeds $2,000.
2. The useful life is extended two or more years.
3. The total costs will be greater than the current book value, and less than the fair market value.
(e) Examples include:
1. A work truck being equipped with screens, lights, or radios for use as a single unit throughout its life expectancy is considered one unit;
2. If police cars are constantly changing light bars or radios to other vehicles, the county will capitalize each piece of equipment separately, if it meets the required dollar amount;
3. A department’s computer (CPU, monitor, keyboard, and printer) is considered one unit;
4. A department will record donated MACHINERY AND EQUIPMENT at fair market value on the date of transfer with any associated costs; and
5. 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.
(B) Recording and accounting.
(1) The county and its various departments shall classify capital expenditures as capital outlays within the fund from which the expenditure was made in accordance with the chart of accounts of the cities’ and towns’ accounting manual. The cost of property, plant, and equipment includes all expenditures necessary to put the asset into position and ready for use. For purposes of recording fixed assets of the county and its departments, the valuation of assets shall be based on historical cost, or where the historical cost is indeterminable, by estimation for those assets in existence.
(2) The county’s municipally-owned utilities shall record acquisition of fixed assets in accordance with generally-accepted accounting principles. When an asset is purchased for cash, the acquisition is simply recorded at the amount of cash paid, including all outlays relating to its purchase and preparation for intended use. Assets may be acquired under a number of other arrangements, including:
(a) Assets acquired for a lump-sum purchase price;
(b) Purchase on deferred payment contract;
(c) Acquisition under capital lease;
(d) Acquisition by exchange of non-monetary assets;
(e) Acquisition by issuance of securities;
(f) Acquisition by self-construction; and
(g) Acquisition by donation or discovery.
(3) Some of these arrangements present special problems relating to the cost to be recorded, for example, in utility accounting, interest during a period of construction has long been recognized as a part of the asset cost. Reference to an intermediate accounting manual will illustrate the recording of acquisition of assets under the aforementioned acquisition arrangements. For purposes of recording fixed assets of the utilities, the valuation of assets shall be based on historical cost.
(4) In addition, an asset register (prescribed form 211) shall be maintained to provide a detail record of the capital assets of the governmental unit.
(C) Safeguarding of assets. Be it ordained that accounting controls be designed and implemented to provide reasonable assurances that:
(1) Capital expenditures made by the county, its various departments, and utilities be in accordance with the management’s authorization, as documented in the minutes;
(2) Transaction of the utilities be recorded as necessary to permit preparation of financial statements in conformity with generally accepted principles;
(3) Adequate detail records be maintained to assure accountability for county- and utility-owned assets;
(4) Access to assets be permitted in accordance with the management’s authorization; and
(5) The recorded accountability for assets be compared with the existing assets at least every two years, and appropriate action be taken with respect to any differences.
(Ord. 1997-12, passed 3-18-1997; Ord. 2007-15, passed 12-18-2007)