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• Each year improvement projects' costs are reviewed to determine what to capitalize and what should remain as expenses. When the 2008 activity was reviewed for this project, based on the information available ro us, we determined that the costs should remain expensed and not capitalized. After we reviewed the 2009 improvement project activity, we concluded that the 2008 project included costs which should have been capitalized and recorded as contributed capital in the Water and Stormwater Funds instead of expensed. The determination involves cousid(ration of the items simply being repair and maintenance or an improvement (betterment). Often street reconstruction projects include both The distinction between repair and maintenance and Improvement is not always clear. In fact the Interpretation of this distinction is a classic, long time accounting debatediseussion which commonly arises while interpreting and implementing generally accepted accounting principles. Some of the criteria we use to help us make the proper interpretation, determination are as follows: • a) An improvement (betterment) provides additional value. Such added value is achieved either by • (I) lengthening a capital assePs estimated useful life or • (2) Increasutgacapud asset's ability to provideservice(i.e. greatereffectivenessor efficiency) • b) Repairs and maintenance retain value rather than provide additional value. Additional mining in accounting for capital assets has provided us with borer guidance and resources to assist us while making these determinations. While we were closing out the books • for 2009, we realized that we needed to correct our interpretation made in 2008. The prior period adjustment is that correction.