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HomeMy WebLinkAboutFinancial Management Manual Section 415Section 415 ACCOUNTING FOR FIXED ASSETS 415.-1     OVERVIEW The City defines Fixed Assets, for the purposes of capitalization, as long-lived tangible items that cost $25,000 or more. Capitalized fixed assets are categorized as follows:  Land  Infrastructure  Buildings and structures  Improvements other than buildings  Computer Equipment  Vehicles  Miscellaneous Equipment Additions or improvements that significantly extend the useful life or substantially increase the operating efficiency of an asset are capitalized. Other related costs that only enable an asset to meet its original estimated useful life or operational efficiency are considered maintenance expenditures in the period incurred. The Finance Division will record all items requiring capitalization using the Fixed Asset system. All fixed assets are valued at cost, or estimated cost, if actual cost is not available. Contributed fixed assets are recorded at estimated fair market value at the time received. The Fixed Asset System will be updated at least annually in conjunction with the annual audit. DEPRECIATION Estimated useful lives are assigned to the various classes of fixed assets. Depreciation, a measure of the exhaustion of economic resources, is an allocation of the cost of a fixed asset over its useful life. Depreciation can then be used to determine the amount which must be budgeted annually to fund replacement of the item. Depreciation is calculated using the Fixed Asset System in conjunction with the annual audit. Infrastructure items such as roads, curbs and gutters, streets and sidewalks, bridges, draining systems, and lighting systems are capitalized and depreciated using the straight line method over the following estimated useful lives: Assets Years Infrastructure 20-100 Buildings and structures 20-50 Improvements other than buildings 10-100 Equipment 3-21 Vehicles See section 405 Detailed information regarding useful lives is provided in the “GASB 34” report prepared for this purpose, and as noted above, fleet replacement guidelines are provided in Section 405 of the Finance Management Manual (Fleet Management).