2023.01.24 CC Packet - Laserfiche WebLink

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3 INTRODUCTION PURPOSE It is the City’s responsibility to maintain adequate control over all capital assets in accordance with Governmental Accounting Standards Board Statement No. 34 (GASB 34). This includes keeping an accurate, complete, and up‐to‐date record and a strategy to minimize the risk of loss or misuse. The goal of the Capital Asset Policy is to provide a guide to help maintain the capital asset accounting system which records the use and disposition of capital assets and provides asset data for use as a management tool. DEFINITION The term “Capital Asset” is used to describe assets that are used in operations and that exceed the City’s capitalization threshold. The capitalization threshold for the City is an asset with a value equal to or greater than $5,000 and has an estimated useful life of at least two years. Capital Assets include: land, land improvements, buildings, building improvements, construction in progress, machinery and equipment, vehicles, infrastructure, easements, and works of art and historical treasures. A capital asset is to be reported and, with certain exceptions, depreciated in the City’s financial statements. Assets that are not capitalized are expended in the year of acquisition. BACKGROUND The City was required to implement GASB 34 for the fiscal year ending December 31, 2003. GASB 34 established many new financial reporting requirements for state and local governments throughout the United States, including new reporting requirements for capital assets and depreciation. The Governmental Fund assets are accounted for in the General Fixed Asset Account Group and these assets are not depreciated nor are they accounted for in the Governmental Funds balance sheet statement. The capital assets of the Enterprise Funds and Internal Service Funds are recorded similar to a private business in that the assets are capitalized on the balance sheet and depreciation is expensed on the income statements. To comply with GASB 34, the Governmental Fund assets are recorded and depreciated similar to the Enterprise Funds only in the Government‐Wide Statements. OBJECTIVES  To maintain a proper system of internal accounting controls regarding the acquisition and disposition of capital assets.  To substantiate capital asset values in accordance with Generally Accepted Accounting Principles (GAAP) for financial reporting purposes.  To provide data to complete long range planning for asset maintenance and replacement and aid in budget preparation, analysis, and approval.  To provide depreciation calculations for those assets which depreciation has been determined to be an appropriate expense measure.  To assign responsibility for the custody and proper use of specific capital assets to the appropriate department officials.  To provide information for insurance purposes.