For the purpose of this chapter, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
BOOK VALUE. The amount remaining after the balance in the depreciation reserve is subtracted from the cost basis.
COST BASIS. Refers to $252,000 for the water treatment plant and $272,000 to the 300 gallon overhead storage reservoir.
DEPRECIATION EXPENSE. The straight-line method of calculating depreciation by using the cost basis divided by the estimated useful life of the water treatment plant and the overhead storage reservoir. This is the annual depreciation.
DEPRECIATION RESERVE. The cash reserve water sinking fund, and shall refer to an actual setting aside of a cash amount annually to such sinking fund to equal the annual depreciation recognized, and to maintain and accumulate such cash amounts annually as a total aggregate or accumulation to meet the objectives of this subchapter. This account may be opened under another title in the chart of accounts in the accounting records as long as the intended purpose and function is preserved and consistent with this subchapter.
ESTIMATED USEFUL LIFE. Refers to the following for the water treatment plant: machinery and equipment, 20 years, and building and structures, 30 years. ESTIMATED USEFUL LIFE shall refer to thirty-three and one-third years for the overhead storage reservoir. Commencement of ESTIMATED USEFUL LIFE shall be either from the time the facility was placed in service or from the time this subchapter takes effect, whichever is first. Proper adjustment should be made for extension of the useful life for the years that such depreciation was not recognized in the accounting records or the operating statements in the past prior to enactment of this subchapter.
FULLY DEPRECIATED. The situation when the book value is zero.
IMPROVEMENTS. Costs incurred to extend the useful life beyond the original estimates, or if such expenditures improve the efficiency, capacity, or efficacy, or if they improve the productivity or practicality.
MINOR REPLACEMENT. Expenditures for replacements below $1,000.
OVERHEAD STORAGE RESERVOIR. The elevated 300 gallon water storage tank located in Block A, and constructed in 1978 at a cost of approximately $272,000.
PARTIAL, BUT MAJOR REPLACEMENTS. The replacement of a component, part, or existing item if the cost of the replacement exceeds $1,000. If the replacement cost does not exceed $1,000, the expenditure does not qualify under this term.
TOTAL REPLACEMENT. The replacement of another facility for a similar purpose; and abandoning the present facility. A TOTAL REPLACEMENT may be made when present facilities have deteriorated beyond continued use, become obsolete, or are necessary to meet technological change.
WATER TREATMENT PLANT. The water treatment plant facility, constructed under revenue bonding arrangement in 1966 at an approximate cost of $252,000 and located at the vacated south end of Ash Street, at a point at which street lies between Block 38 and the former Block 39.
(Prior Code, § 5.0402)