§ 34.50 CAPITAL ASSET POLICY.
   (A)   Generally.
      (1)   The City of Washington adopts a fixed asset policy that is effective January 1, 2004, and will be known as the “Capital Asset Policy.” This Policy is to include fixed assets as well as infrastructure assets. The Policy is being put in effect to comply with the provisions of GASB 34 and the requirements of the Indiana State Board of Accounts. All provisions of GASB 34, except retroactive reporting, will be implemented for fiscal years beginning January 1, 2004. Retroactive reporting of general infrastructure assets will be implemented for fiscal years beginning January 1, 2006, and all infrastructures acquired after GASB 34 implementation will be reported on a prospective basis. Assets that do not meet the specified threshold will be expensed in the year of purchase. An inventory of fixed assets, excluding land, buildings and infrastructure will be housed within the city's financial reporting system.
      (2)   The City of Washington is adopting this Policy to enhance financial and operational accountability to the citizens of Washington and to all other concerned constituents.
      (3)   The purpose of establishing a Capital Asset Policy is to:
         (a)   Comply with the standards of GASB 34.
         (b)   Maintain accurate records of all fixed assets that are capitalized, including infrastructure.
         (c)   Increase accuracy and clarity of financial reporting.
         (d)   To better serve the citizens of the City of Washington and the city's constituents.
      (4)   This Policy will only serve to classify all capital assets, including fixed and infrastructure, for accuracy in financial reporting to the Indiana State Board of Accounts.
   (B)   Definition of capital assets.
      (1)   CAPITAL ASSETS are to include: land, land improvements, buildings, building improvements, machinery and equipment, vehicles, construction work in progress, easements, works of art, historical treasures and infrastructure. These assets are to have a cost of greater than $5,000. The cost of the asset will include all expenses necessary to make the asset fully operational. Assets acquired through lease purchase agreements that meet these specifications are to be capitalized. This cost will be determined as the present value or discounted value of the future stream of lease payments, and not the total lease. Items that do not meet this definition of CAPITAL ASSETS are to be expensed in the year the asset is acquired.
      (2)   Exceptions:
         (a)   Office equipment, which is custom fit to the needs of a particular office, will be capitalized as a portion of the cost of the building or area in which they are located. All other office supplies and equipment will be capitalized if it meets the specified requirements for capitalization.
         (b)   Inexhaustible assets such as land, improvements, artwork, statues, and the like, will be reported at cost.
   (C)   Classification of capital assets. Capital assets are to include any item that falls into 1 of the following categories: land, land improvements, buildings, building improvements, machinery and equipment, construction work in progress, vehicles, easements, works of art and historical treasures. These categories of capital assets are to be defined as follows:
      (1)   BUILDING IMPROVEMENTS. Items which extend the useful life of the building are to be capitalized, including remodeling, roofing projects, energy conservation projects, and the like. These items are to be inventoried including: project description, year completed, funding source and dollar amount.
      (2)   BUILDINGS. All structures erected by the city for the purpose of conducting business, providing service, or facilitating work to the citizens of Washington. This includes all fixtures, and systems within the building, as well as specifically designed equipment. This may also include all porches, balconies, canopies, flagpoles, stairwells, fire escapes, patios, decks and any other attachments that add to the value of the building.
      (3)   EASEMENTS. A specific land interest held by the city that entitles it to a specific use or right to the land. Since an EASEMENT is a right to use, they will not be reported in the financial statements unless they are owned by the city.
      (4)   LAND. All lots, parcels, rights-of-way, easements, parks, police and fire stations, and acreage owned by the City of Washington. This is to include all bodies of water and natural vegetation, which is growing on these properties.
      (5)   LAND IMPROVEMENTS. Items such as retaining walls, driveways, landscaping, parking areas, sprinkler systems, fencing and other items that add value to or may be considered an improvement in making the land ready for its intended use.
      (6)   MACHINERY AND EQUIPMENT. Includes furniture and machinery and equipment. This may include items such as office equipment, furnishings, appliances, earth moving equipment, construction equipment, communication equipment, maintenance equipment, supplies, and the like. Items that do not individually meet the established threshold of $5,000 may be aggregated for capitalization purposes. This may include computers, library books, and the like.
      (7)   VEHICLES. Vehicles will be inventoried.
      (8)   WORKS OF ART AND HISTORICAL TREASURES. These items are to be recorded at historical cost.
   (D)   Valuation of capital assets.
      (1)   All fixed assets will be valued at the unit or system level. If these costs exceed $5,000, they will be capitalized. Any expense pertaining to the cost of making the asset operational may be included in this cost. This may include the following:
         (a)   Legal and title fees, closing costs;
         (b)   Appraisal and negotiation fees, surveying fees;
         (c)   Damage payments;
         (d)   Land preparation costs, demolition costs;
         (e)   Architect, engineering and accounting fees;
         (f)   Insurance premiums during construction; and
         (g)   Transportation charges.
      (2)   Capital assets are to be recorded at actual cost, which includes all expenses to make the asset fully operational. If no cost is available, replacement cost or a historic cost index may be used.
      (3)   Fixed assets will be capitalized when they exceed the sum of $5,000.
   (E)   Physical inventory and reconciliation policy. All capital assets will be inventoried every year. A physical inventory will be the responsibility of each department head to account for all capital assets at year-end, as well as inventory items that are simply tracked and inventoried. The physical inventory will include the following items: asset description, year of acquisition, method of acquisition, funding source, cost or estimate cost and salvage value. This information will be housed and updated in the city's Financial Reporting System.
   (F)   Capital asset acquisition and obsolescence. Any newly acquired assets with a value of $5,000 or more are to be reported on the asset form provided by the Clerk Treasurer’s Office. Any assets with a value of less than $5,000 which are no longer in use will be stricken from the printouts provided for each office. Both reports adding assets and removing assets are due in the Clerk-Treasurer's Office by the first Friday in January of each year.
   (G)   Capital asset disposition and transfer.
      (1)   A distinction will be made by the Clerk-Treasurer as to whether the action is a betterment or a replacement. A betterment adds to or extends the useful life of the asset. These costs are to be added to the current carrying cost of the asset. A replacement requires that the asset be removed from the books and a new asset be recorded at cost.
      (2)   Some situations may be considered to be part betterment and part replacement. This requires determining the distribution of betterment and replacement. Once the distribution is determined, the respective portions should be handled in the usual manner for a replacement or betterment. In situations where assets are traded, the asset is to be removed from the books. If only 1 part of the asset is being disposed of, that asset must be removed from the books using a pro-rata share of the cost.
   (H)   Infrastructure assets.
      (1)   All infrastructure assets are to be reported at cost. Cost may include all costs necessary to make the asset fully operational. These costs may include:
         (a)   Legal and title fees, closing costs;
         (b)   Appraisal and negotiation fees, surveying fees;
         (c)   Damage payments;
         (d)   Land preparation costs, demolition cost;
         (e)   Architect, engineering and accounting fees;
         (f)   Insurance premiums during construction; and
         (g)   Transportation charges.
      (2)   All infrastructure exceeding $5,000 will be inventoried.
      (3)   Implementation date and plan for retroactive reporting. All provisions of GASB 34, except retroactive reporting is to occur for fiscal year January 1, 2004. Retroactive reporting is not required until fiscal years beginning January 1, 2006.
      (4)   Retroactive reporting will require obtaining historic cost of all major infrastructure assets that were acquired before GASB 34 implementation and after January 1, 1981. These costs may include all cost necessary to make the asset fully operational.
      (5)   For infrastructure assets where no historic cost is available, a cost index or replacement cost may be used. It is not sufficient to use assessment cost for the purposes of retroactive reporting.
   (I)   Infrastructure record keeping requirements. The City of Washington’s Street Department will be responsible for recording values of ail infrastructure assets in excess of $5,000.
(Res. 17-2004, passed 12-13-2004; Am. Ord. 4-2023, passed 2-27-2023)