For the purpose of this subchapter, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
BUILDINGS.
(1) All buildings designed and erected to house equipment, services or functions will be capitalized if they meet the capital asset qualifications.
(2) All buildings will be capitalized at full cost, which includes attachments. Examples of attachments are roofs, heating/cooling, plumbing, lighting, sprinkler systems, alarm/sound/surveillance systems, and other fixed equipment that serve the building. Communication antennas and/or towers are not included as part of the building.
(3) Improvements or renovations on an existing building will only be capitalized if they meet the capital asset qualifications.
(4) Capital building costs include preparation of land for the building, architectural and engineering fees, bond issuance fees and accounting fees directly attributable to the construction of the building.
CAPITAL ASSETS. Tangible assets of a durable nature employed in the operating activities of the town and 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. These capital assets are usually separated into classes according to the physical characteristics of the item. These items are as follows:
(1) Land and/or land improvements;
(2) Easements;
(3) Rights-of-way;
(4) Buildings and/or building improve- ments;
(5) Construction in progress;
(6) Equipment; and
(7) Infrastructure.
CAPITAL ASSET QUALIFICATIONS.
(1) Land, easements, right of ways and land improvements will be capitalized but not depreciated. Other capital assets (including acquisitions by lease-purchase agreements and donated items) with a useful life of more than one year shall be capitalized and depreciated.
(2) All assets must have a total cost exceeding $10,000 to be capitalized. Capital assets should be recorded at actual cost. The cost recorded is the purchase price or construction costs of the asset, but also includes any other reasonable and necessary costs incurred to place the asset in its intended location and intended use. Donated or contributed assets should be recorded at their fair market value on the date donated or acquired plus any associated costs. Purchases made using federal or state funding will follow the source funding policies and any procedures included in this subchapter.
CONSTRUCTION IN PROGRESS. Where construction work has not been completed in the current reporting calendar year, the cost of the project should be carried as “construction work in progress”. When the project is completed, it will be placed in the appropriate capital asset classification.
DEPRECIATION. The loss of value each year of a capital asset during its anticipated useful life span. Depreciation of a capital asset is determined by the year the capital asset was purchased, at what price and what is the anticipated useful life span.
EQUIPMENT.
(1) An apparatus, tool or accumulation of pieces to form a tool. The tool must stand alone and not be a part of a basic structure or building. Examples are office furniture, mechanical equipment, maintenance equipment, vehicles, computer equipment, lab equipment and appliances. Other examples are, a vehicle being equipped with lights, radios, plows, etc., for use as a single unit throughout the vehicles life expectancy is considered one unit. A vehicle that will be changing light bars, radios, etc, will capitalize each piece of equipment if it meets the capital asset qualification. A computer, monitor, keyboard and printer are considered one unit.
(2) Original cost of the above items will include the shipping charges, consultant fees, and any other cost directly associated with the purchase, delivery, or set up, (including contractors and/or town employees salaries), which make such equipment operable for its intended purpose.
(3) New equipment or improvements/ renovations to existing equipment will be capitalized only if they meet the capital asset qualifications.
IMPROVEMENTS OTHER THAN BUILDINGS.
(1) Improvements to land, attached or not easily removed. Examples are sidewalks, parking areas, fencing, retaining walls, outside fountains, planters and underground sprinkler systems. Utility assets in this category are water supply mains, collection sewers, wells, fences, intake pipes, manholes and fire hydrants.
(2) New improvements or improvements/ renovations to existing improvements will be capitalized only if they meet the capital asset qualifications.
INFRASTRUCTURE.
(1) Infrastructure assets are long-lived capital assets that are preserved for a significantly greater number of years than most capital assets and are usually stationary in nature. Examples are, roads, bridges, sidewalks, street/traffic lights, street signs, drainage/water systems. Infrastructure assets can also include structures directly related to the infrastructure such as, road maintenance structures (shops/garages) associated with a highway system and water pumping buildings associated with water systems.
(2) New infrastructure or improvements/ renovations to existing infrastructure will be capitalized only if they meet the capital asset qualifications.
LAND, EASEMENTS AND RIGHT-OF-WAYS.
(1) All land, easements, right-of-ways, lots, parcels or acreage owned by the town or its various departments, boards or authorities will be capitalized regardless of cost.
(2) Original cost of the above items will include the full value given to the seller, including legal services incidental to the purchase (including title work and recording of purchase), appraisal and negotiation fees, surveying and costs for preparing the land for its intended purpose (including contractors, and/or town employees salaries), such as demolishing buildings, excavating, clean up and/or inspection.
(Ord. 05-06, passed 5-10-05; Am. Ord. 16-04, passed 10-11-16)