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Home My Public Portal About12 - 2020-11 - CAPITAL ASSEST MANAGEMENT POLICY RESOLUTION NO. 2020-11 COMMON COUNCIL CITY OF GREENCASTLE, INDIANA A RESOLUTION ESTABLISHING A CAPITAL ASSET MANAGEMENT POLICY WHEREAS, the Common Council of the City of Greencastle acknowledges that sound accounting principles and responsible fiscal management require a policy for the purpose of capitalizing, depreciating and estimating the useful lives of the City of Greencastle depreciable assets; WHEREAS, the Common Council further acknowledges that a capital asset management policy provides the City more control over its investments in capital assets and demonstrates financial accountability to the City's citizens and regulatory entities; WHEREAS, the Capital Asset Management Policy is attached and includes the capital asset useful life; WHEREAS, all details about all capital assets and other assets can be obtained by contracting the Clerks Treasurer's Office; NOW, THEREFORE, BE IT RESOLVED THAT THE GREENCASTLE COMMON COUNCIL approves the attached Capital Asset Management Policy and Useful Life Table: COMMON COUNCIL OF THE CITY OF GREENCASTLE / C M• k Hammer .dy ert '/ 1.._. aumtkidiPi A. •m C. en D• r •fL Oma' ...isea' 'k ki,c.,(-- Stacie Lanidon ob Widner V- ; •ejri651°- Approved and signed by me this 12th day of November 2020, at :S o'clock p.m. Or- 7 Iiiia71 William A. Dory,Jr. ATTEST: / y •a R. Dunbar, Clerk-Treasurer City of Greencastle /4•114,1/4'1-4; .;r: City Hall : - One North Locust Street, P.O. Box 607 =""';'�� Greencastle, Indiana 46135 L ry Capital Asset Management Policy This policy establishes the minimum cost value (capitalization amount)that shall be used to determine capital assets, including infrastructure assets, which are to be recorded in the City of Greencastle annual financial report. This policy will be effective upon the adoption by the Greencastle Common Council. The City has opted not to apply the policy retroactively, nor will the City restate prior period financial reports. The City will identify any items that do not currently comply with the policy, and document them as such until the asset is retired or transferred to the other items/inventory records ledger at the discretion of the Clerk-Treasurer. Capital Asset Definition: Capital assets are defined as tangible and intangible assets that have initial useful lives that extend beyond a single reporting period and costs equal to or greater than the relevant capitalization threshold. Capitalization Method: All capital assets are recorded at historical cost as of the date acquired or constructed. If historical cost information is not available, assets are recorded at estimated historical cost by calculating current replacement cost and deflating the cost using the appropriated price-level index. Other relevant historical documents may be used in determining fair value. Capitalization Thresholds: The City of Greencastle establishes the following minimum capitalization thresholds for capitalizing fixed assets: Land $1.00 Buildings $5,000.00 Improvements Other Than $5,000.00 Machinery, Equipment and Vehicles $5,000.00 Infrastructure $5,000.00 Detailed records shall be maintained for all assets above the established thresholds. In the event that a capital asset is acquired that is not considered in this policy, the City will update this policy at that time. Other Assets/Inventory Records: At the discretion of the Clerk-Treasurer, detailed records may also be maintained for other items below the capitalization thresholds which should be safeguarded from loss. These items are part of the annual physical inventory discussed below. These items include electronics and computer equipment that fall below the established thresholds and any other assets specified by the Clerk-Treasurer. Depreciation and Useful Life: The Clerk Treasurer will assign an estimated useful life to all assets for the purposes of recording depreciation. The "suggested useful lives" schedule below will be used to establish lives in accordance with Indiana State Board of Account Mayor's Office: 765-653-3100 Clerk-Treasurer: 765-653-9211 City Planner: 765-653-7719 Building Inspector: 765-653-8522 for most assets. Asset lives will be adjusted as necessary depending on the present condition and use of the asset and based on how long the asset is expected to meet current service demands. Adjustment will be properly documented if need be. The City of Greencastle will use the straight line depreciation method to depreciate capital assets. This method will depreciate the value of the capital asset gradually over its useful life. Each full accounting year will be allocated the same amount of the percentage of the asset's cost. Contributed of Donated Assets: Contributed or donated assets must be capitalized at current appraised or fair market value as of the date of donation. Capital Leases: The City will record of items acquired through a lease/purchase agreement as capital assets if they meet applicable capitalization thresholds. Items acquired through a lease/purchase agreement that do not meet applicable capitalization thresholds are included in the Operating Leases discussed below. The City should maintain all new or renewed lease agreements for determination of the proper classification as either a capital or operating lease. The lease/purchase item will be entered at the present-value amount. Operating Leases: The City will keep record of all operating lease agreements. The City will report all operating leases with a threshold of $15,000 or more per year. Items acquired through a lease/purchase agreement that are below the capitalization threshold are included in the Other Assets discussed above. Asset Retirements: When retiring an asset, the Department that had custody of the asset must inform the Clerk-Treasurer of the asset retirement via email. If the asset was traded-in, this should be noted in the email along with a description of the new asset received. If the asset was sold or traded-in, the amount of the funds received should be outlined within the email. The City is responsible for tracking proceeds related to the sale of assets. Impairments: The department head is responsible for determining whether an asset should be classified as impaired. In order to determine impairment, one or more of the following conditions must apply: • Evidence of physical damage (damage by fire, flood, act of nature, inability to perform at original means due to accident or other means) • Enactment or approval of laws or regulations or other changes in environmental factors • Technological changes or evidence of obsolescence • A change in the manner or expected duration of use of a capital asset • Construction stoppage If an asset is impaired, the department head should reevaluate its remaining useful life and salvage value. Asset Transfers: When a capital asset is exchanged between departments, the asset should be entered as an asset transfer out by the department initially in possession of the asset and a transfer in by the receiving department. If an asset exchange between departments involves the transfer of cash, the cash should not exceed the net book value;the department heads must justify the difference and have it approved by the Mayor. If approved,the additional cash will be recorded as an interfund transfer rather than revenue and expense. Transfers shall be recorded and reported as outlined in the safeguarding and controlling fixed capital assets and other inventory discussed below. Construction in Progress (CIP): Capital expenditures incurred with constructing or developing a tangible or intangible capital asset before it is substantially ready to be placed into service is categorized as Construction in Progress. Once the asset is complete and placed into service the asset will be reclassified into the appropriate capital asset category. Until the asset is placed into service, no depreciation expense will be incurred. Safeguarding and Controlling Capital Assets and Other Inventory: Each department head will maintain a record of capital assets as they are purchased and disposed of, which is then forwarded to the Clerk-Treasurer's office quarterly to ensure proper recording. Each department head will maintain inventory records for other items below the capitalization threshold which should be safeguarded from loss. The results are forwarded to the Clerk-Treasurer's office by January 315t of each year Each department head will perform a physical inventory of both capital assets and other inventory annually. The results are forwarded to the office of the Clerk-Treasurer by January 315t of each year to ensure proper recording. USEFUL LIFE TABLE ASSET CLASS USEFUL LIFE LAND: Land Not Applicable Land Improvement Not Applicable Right of Way Not Applicable Easement Not Applicable BUILDINGS: Permanent Structure 50 Years Wood Frame Structure 25 Years Foundation, Frame, Floor Structure 50 Years Interior Construction 15 Years HVAC Systems/Fire Alarms 20 Years Floor Covering 15 Years Carpet 5 Years Electrical 20 Years Plumbing 20 Years Elevators 20 Years Masonry Interior/Exterior Construction 10 Years Wood Frame Open Structure (i.e. Park Shelter) 30 Years Metal Frame Open Structure 50 Years Roof 10 Years IMPROVEMENTS OTHER THAN BUILDINGS Parking Lots 50 Years Street Lights/Traffic Lights/Flag Poles 25 Years Fencing 20 Years Swimming Pools 20 Years Pedestrian Bridges 30 Years Major Bridges 50 Years Alleys 50 Years Outside Irrigation Systems 25 Years Fountains 20 Years Tennis& Basketball Courts 20 Years Tunnel 50 Years Roads 50 Years Signs 10 Years INFRASTRUCTURE: Sewers including Manholes and Pipes 100 Years Water Lines 50 Years Lift Stations and Gas Stations 50 Years Treatment Plants 50 Years Pumps 20 Years Storm Drains 50 Years Storm Infrastructure 50 Years MACHINERY &EQUIPMENT: Heavy Mobile Equipment 12 Years Fire Apparatus (Fire Trucks) 20 Years Fire Equipment 10 Years General Equipment 12 Years Athletic/Exercise Equipment 10 Years Indoor Recreation Equipment 10 Years AV Equipment 7 Years Computer Hardware 5 Years Copiers 5 Years Communication Equipment 5 Years Servers 7 Years Surveying Equipment 10 Years Furniture 15 Years Appliances/Food Service Equipment 15 Years General Shop Equipment 20 Years General Tools 10 Years Outdoor Recreation Equipment 15 Years Trailers 12 Years Mowers 5 Years Storm Sirens 20 Years VEHICLES (Licensed): Automobile 6 Years Golf Cart 6 Years ATV 6 Years Truck 6 Years SUV 6 Years