For the purposes of this chapter, the following definitions shall apply unless the context clearly indicates otherwise or requires a different meaning.
CAPITAL LEASE. Leased equipment will be capitalized if the lease agreement meets any one of the following criteria:
(1) The lease transfers ownership of the property to the lessee by the end of the lease term;
(2) The lease contains a bargain purchase option;
(3) The lease term is equal to 75% of the estimated economic life of the leased property;
(4) The present value of the minimum lease payments at the inception of the lease, excluding any executory costs, equals at least 90% of the fair value of the leased property.
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.
ENTERPRISE FUNDS. A fund established to finance and account for the acquisition, operation, and maintenance of governmental facilities and services which are entirely or predominately self-supporting by user charges. The enterprise funds of the town would include any municipally owned sewage and/or stormwater utilities. Operation of these utilities shall require enterprise fund accounting and reporting.
FIXED ASSETS. Tangible assets of a durable nature employed in the operating activities of the town and that 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. This broad group is usually separated in classes according to the physical characteristics of the items (i.e. land, buildings, improvements other than buildings, machinery and equipment, furniture and fixtures).
HISTORICAL COST. The cash equivalent price exchanged for goods reflects the current fair market value of the asset on the date of acquisition. Land, buildings, equipment, and most inventories are common examples of items recognized under the Historical Cost attribute.
TANGIBLE ASSETS. The distinguishing characteristics of assets in this category are that they have physical substance and are generally held for productive use in the business operation.
(Ord. 154, passed 2-20-2007)