The following capitalization policy provisions shall apply for each form or type of specific assets identified, namely:
(A) Land.
(1) The town will capitalize all land purchases, regardless of cost, excluding the acquisition of easements, or right-of-way for infrastructure. Examples of infrastructure include roads and streets, street light systems, bridges, overpasses, sidewalks, curbs, parking meters, street signs, and storm water collection.
(2) Original cost of land will include the full value given to the seller, including any 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 town workers (salary and benefits), such as demolition of buildings, excavating, clean up, and/or inspection.
(3) The town will record donated land at fair market value on the date of transfer plus any associated costs.
(4) Purchases made using federal or state funding will follow the source funding policies and above procedures.
(B) Machinery and equipment.
(1) This category may include a wide variety of items, including all types of machinery, furniture, fixtures, vehicles, tools, computers and office equipment. Machinery and equipment will generally stand alone; however, in some instances it may become an integral part of a building.
(2) The town will capitalize items with an individual value equal to or greater than $5,000. Machinery combined with other machinery to form one unit with a total value greater than the above mentioned limit will be one unit.
(3) Shipping charges, consultant fees, and any other cost directly associated with the purchase, delivery, or set up, including contractors and/or town workers (salary and benefits), which makes such equipment operable for its intended purpose will be capitalized.
(4) Improvements or renovations to existing machinery and equipment will be capitalized only if the result of the change meets all the following conditions:
(a) Total costs exceeds $5,000; and,
(b) The improvement or renovation extends the item's economic life more than one year.
(5) Examples include: a computer (CPU, monitor, keyboard, and printer) is considered one unit.
(6) The town will record donated machinery and equipment at fair market value on the date of transfer plus any associated costs.
(7) All machinery and equipment with a value equal to or greater than $5,000 shall be tagged and inventoried.
(8) Purchases made using federal or state funding will follow the source funding policies and above procedures.
(C) Buildings.
(1) The town will capitalize newly constructed buildings at full cost with no subcategories for tracking the cost of attachments. Examples of attachments are heating, cooling, lighting, or sprinkler systems, or any part of the basic building. The town will include the cost of items designed or purchased exclusively for the building.
(2) In the event the town improves or renovates an existing building, the town will capitalize the cost only if the result meets both of the following conditions:
(a) The total cost exceeds $5,000; and,
(b) The improvement or renovation extends the building's economic life more than one year.
(3) The town will depreciate building component improvements such as HVAC systems and roofing improvements for a period of 20 years.
(4) 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, any costs directly attributable to the construction of a building.
(5) The town will record donated buildings at fair market value on the date of transfer plus any associated costs.
(6) Purchases made using federal or state funding will follow the source funding policies and above procedures.
(D) Improvements other than buildings.
(1) These assets are defined as improvements to land for better enjoyment, attached or not easily removed, and which will have a life expectancy of greater than one year. Examples are walks, parking areas and drives, paths, fencing, retaining walls, pools, outside fountains, planters, underground sprinkler systems, and other similar items. Improvements do not include roads, streets, or assets that are of value only to the public. For example, 109th Avenue is a public street with greatest value to the public. Roads or drives upon town-owned land that provide support to our facilities arc assets. A sidewalk along a road for public enjoyment is an infrastructure improvement and is not capitalized. However, sidewalks installed upon the town-owned land for use by the public and for the support of our facility are capital assets.
(2) The town will capitalize any new improvements to existing assets, other than buildings, only if it meets the following conditions:
(a) The total cost exceeds $5,000; and
(b) The useful life is greater than one year.
(3) Any donated improvements other than buildings will be recorded at fair market value on the date of transfer plus any associated costs.
(4) Purchases made using federal or state funding will follow the source finding policies and above procedures.
(E) Infrastructure.
(1) Infrastructure assets are long-lived capital assets that normally can be preserved for a significantly greater number of years than most capital assets and are normally stationary in nature. Examples include roads, streetlights, traffic signals, drainage systems, and water systems. Infrastructure assets do not include buildings, drives, parking lots or any other examples given above that are incidental to property or access to the property above.
(2) Additions and improvements to infrastructure which increase the capacity or efficiency of the asset will be capitalized. Maintenance and repairs will be considered as necessary to maintain the existing asset and, therefore, not capitalized. For example, patching, resurfacing, snow removal, etc., are considered maintenance activities and will be expensed. Also, normal department operating activities such as feasibility studies, and preliminary engineering and design, will be expensed and not capitalized as an element of the infrastructure asset.
(Ord. 154, passed 2-20-2007)