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Home My WebLink AboutCapital and Intangible Asset Policy RESOLUTION 2016-843 ADOPTED DOC ID: 12265 THIS IS TO CERTIFY THAT THE FOLLOWING RESOLUTION NO. 2016-843 WAS ADOPTED AT THE REGULAR MEETING OF THE SOUTHOLD TOWN BOARD ON SEPTEMBER 20, 2016: RESOLVEDhereby adopts the following policy entitled: that the Town Board of the Town of Southold TOWN OF SOUTHOLD CAPITAL AND INTANGIBLE ASSET POLICY Capital Assets Property records and inventory records are maintained in a Capital Assets software application for land, land improvements, buildings, vehicles and equipment and other assets under the control of the Town as outlined below. Fairly reporting fixed assets is important for two key reasons. First, it allows the Town to meet the requirements under Generally Accepted Accounting Principles (GAAP) for fairly reporting fixed assets in its general purpose financial statements. Second, fixed asset accounting provides management with a valuable tool for controlling fixed assets and planning replacements. Fixed asset accounting is a valuable management tool because it 1) Establishes a record of fixed assets. Having a formal record enables the Town Board to easily determine what assets they have and where they are located. 2) Fixes responsibilities over assets. Fixing responsibility for assets improves the care that employees exercise over assets. In addition, it enables the Town Board to fulfill its stewardship responsibilities in managing the assets. 3) Identifies financing source of assets. It provides a record of how each asset was financed. This information may be useful in planning future purchases and how they will be financed. 4) Provides the Town Board with useful information including: Replacement cost. Knowing what an asset cost may help the Town Board in determining an approximate replacement cost. This is particularly important if the Town Board establishes a reserve for future capital acquisitions. Insurance coverage - knowing the values of assets permits the optimum insurance coverage by eliminating over or under insurance coverage. In addition, fixed asset records provide valuable information for proof of loss if a claim for loss is filed. Maintenance cost - knowing what assets a local government has is beneficial in planning a repair and preventive maintenance schedule and providing for the required expenditure. Useful Life- Know how long an asset is expected to last may help in planning for future replacement and expansion programs. Capital Budget-Knowing what assets the Town has is very useful in forming an overall capital improvement program for acquiring and replacing fixed assets and determining how to finance such purchase. Resolution 2016-843 Board Meeting of September 20, 2016 FIXED ASSETS PROGRAM OUTLINE The Town has established $5,000 as the minimum dollar value of a fixed asset owned by the Town to be recorded in more than $500 may be inventoried for property control purposes The Town Board has overall responsibility for the fixed assets of the Town and the Office of the Town Comptroller has overall responsibility for the accuracy and usefulness of the fixed asset inventory. All fixed assets are recorded at historical cost, estimated if the actual cost is not available, unless acquired through gift, in which case, the fair market value at the time of acquisition will be recorded. This cost factor will be reflected in the accounting records until the fixed asset is disposed of. CLASSIFICATION The fixed assets of the Town are recorded into one of the following accounts: Land Buildings Improvements other than Buildings Machinery & Equipment Construction in Progress Infrastructure The record maintained for each asset includes information used to identify the asset and usually includes the asset number, serial number or tax map number, department, owning fund, acquisition date or approximate date of acquisition, acquisition cost, method of financing, vendor name, as well as depreciation. Initial costs of fixed assets and methods of financing are usually determined from contracts, purchase orders, and other transaction documents. When the original purchase documents are not available or inordinate expenditures will be required to determine the cost and/or method of financing, the original cost is estimated and so noted. As new inventory items are acquired or surplus fixed assets are disposed of, the individual property records are added to or eliminated from the inventory file. Items are depreciated in the fixed asset system on a straight-line method based on the date placed into service. Intangible Assets GASB 51 defines intangible assets as lacking physical evidence, nonfinancial in nature and with an initial life extending beyond one fiscal year. Intangible assets include but are not limited to development rights, easements and computer software. The Town does not capitalize internally generated capital assets produced by Town labor. In most cases, the Town capitalizes all other intangible assets exceeding $5,000 in value. Intangibles with indefinite useful lives are capitalized (if it exceeds the threshold) and are not amortized. Periods of Useful Life Under GASB 34, the Town has assigned useful lives for its fixed assets as close as possible to the probable useful life. The Office of the Town Comptroller maintains a schedule indicating the current Estimated Useful Life of assets maintained in the fixed assets inventory (Appendix A). Appendix A Updated: 9/21/2016 10:25 AM by John Cushman Page 2 Resolution 2016-843 Board Meeting of September 20, 2016 Town of Southold Asset Useful Lives Table Estimated Estimated Useful Life Useful Life ClassAsset ClassificationExamplesIn YearsIn Months 010LandPermanentPermanent 012Landfill Closure30360 014Bridges25300 015Development RightsPermanentPermanent 016RoadwaysAsphalt, Asphalt Overlays25300 016RoadwaysOil & Stone Treatments896 016RoadwaysMicropaving560 017Paths, Tracks, Parking LotsAsphalt, Asphalt Overlays25300 017Paths, Tracks, Parking LotsOil & Stone Treatments896 017Paths, Tracks, Parking LotsMicropaving560 018Sidewalks30360 019Drainage Systems20240 020Portable BuildingsOffice Trailers, Storage Sheds25300 020BuildingsStructures40480 020BuildingsHVAC Systems20240 020BuildingsRoofing20240 020BuildingsInterior Construction20240 020BuildingsElectrical/Plumbing20240 020BuildingsSprinkler/fire suppression system20240 022Building ImprovementsDeck Canopy10120 023Ferry terminals30360 024Dock Improvements20240 025Street Lights20240 028Fence10120 030Carpeting10120 022Generators10120 037Telephone Systems10120 037Copier Machines560 040Computer Scanners560 041Computer HardwareTape Drives, Misc.560 042Computer Software (AS/400)10120 042Computer Software (PC)560 044Computer HardwarePC's, printers, network hardware560 046Computer HardwareLarge Printers560 050Motor Vehicles896 055Trailers896 060EquipmentLarge Tractors, Loaders10120 060Grounds EquipmentMowers, tractors, attachments10120 060EquipmentMachinery & Tools10120 060Outdoor equipmentPlaygrounds, radio towers, fuel tanks, pumps10120 060Kitchen EquipmentAppliances10120 060Custodial EquipmentVacuums, floor scrubbers10120 060Furniture10120 060Office EquipmentFax machines, printing equipment10120 060Communication EquipmentRadios, base stations10120 060A/V EquipmentProjectors, cameras10120 070BoatsHulls10120 070Ferry BoatsHulls40480 Updated: 9/21/2016 10:25 AM by John Cushman Page 3 Resolution 2016-843 Board Meeting of September 20, 2016 Elizabeth A. Neville Southold Town Clerk RESULT: ADOPTED \[UNANIMOUS\] MOVER: Jill Doherty, Councilwoman SECONDER: Louisa P. Evans, Justice AYES: Dinizio Jr, Ruland, Doherty, Ghosio, Evans ABSENT: Scott A. Russell Updated: 9/21/2016 10:25 AM by John Cushman Page 4