capital asset policies and procedures handbook. session objectives understand what data might be...
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Session ObjectivesSession Objectives
Understand What Data Might Be Understand What Data Might Be Included in A Detailed Capital Asset Included in A Detailed Capital Asset Policies & Procedures HandbookPolicies & Procedures Handbook
Discuss in Detail Each of the Topics Discuss in Detail Each of the Topics Included in the Above DocumentIncluded in the Above Document
A Capital Asset Record SystemA Capital Asset Record System
Is It Integrated With The General Is It Integrated With The General Ledger System?Ledger System?
Can It Calculate Depreciation Expense By Can It Calculate Depreciation Expense By Function?Function?
Can It Provide A Report Of Disposed Can It Provide A Report Of Disposed Assets?Assets?
Can It Provide A Report Of Data By Can It Provide A Report Of Data By Function?Function?
A Capital Asset Record SystemA Capital Asset Record System
What It IsWhat It Is
How it WorksHow it Works
Who Does WhatWho Does What
How Much DetailHow Much Detail
The Property RecordThe Property Record
Property Identification NumberProperty Identification Number
Fund and AccountFund and Account
Major Asset ClassMajor Asset Class
Function and ActivityFunction and Activity
Acquisition Document NumberAcquisition Document Number
Acquisition DateAcquisition Date
The Property RecordThe Property Record
Method of AcquisitionMethod of Acquisition
Name and Address of VendorName and Address of Vendor
Description of AssetDescription of Asset
Organization UnitOrganization Unit
LocationLocation
Estimated Useful LifeEstimated Useful Life
The Property RecordThe Property Record
Estimated Salvage ValueEstimated Salvage Value
Date, Method, and Authorization of DispositionDate, Method, and Authorization of Disposition
Identify Reporting RequirementsIdentify Reporting Requirements
Inventory Report by LocationInventory Report by Location
Inventory Report by StewardshipInventory Report by Stewardship
Inventory Report by ClassInventory Report by Class
Depreciation Expense ReportDepreciation Expense Report
Schedule of Capital Assets by ClassSchedule of Capital Assets by Class
Schedule of changes in Capital Assets by ClassSchedule of changes in Capital Assets by Class
Identify Reporting RequirementsIdentify Reporting Requirements
Schedule of Capital Assets by Function and Schedule of Capital Assets by Function and ActivityActivity
Schedule of Changes in Capital Assets by Schedule of Changes in Capital Assets by Function Function and Activityand Activity
Asset Replacement ReportAsset Replacement Report
Online Access to DataOnline Access to Data
Inquiry by Property Identification NumberInquiry by Property Identification NumberInquiry by LocationInquiry by LocationInquiry by Asset ClassInquiry by Asset Class
Capital Asset ClassificationsCapital Asset Classifications
Specific ClassificationsSpecific Classifications
ThresholdsThresholds
Capital Asset ClassificationCapital Asset Classification
Capital Assets Includes:Capital Assets Includes:
-Land -Land -Land Improvements-Land Improvements-Buildings -Buildings -Building Improvements-Building Improvements-Vehicles-Vehicles-Machinery & Equipment-Machinery & Equipment-Works of Art & Historical Treasures-Works of Art & Historical Treasures-Infrastructure-Infrastructure-In-tangible Assets-In-tangible Assets
Capital Asset ThresholdsCapital Asset Thresholds
•Two Primary CriteriaTwo Primary Criteria
- Cost of the Asset- Cost of the Asset
- Useful Life- Useful Life
National GFOA Recommends a $5,000 National GFOA Recommends a $5,000 Threshold Per Unit Threshold Per Unit
•Threshold Needs To Cover 75% - 80% of Threshold Needs To Cover 75% - 80% of The CostsThe Costs
Capital Asset ThresholdsCapital Asset Thresholds
Spend Your Time Controlling Large Spend Your Time Controlling Large ItemsItems
LandLandBuildingsBuildingsVehiclesVehicles
Capital Asset ThresholdsCapital Asset Thresholds
Capitalized Items Versus Capitalized Items Versus Controllable ItemsControllable Items
Group Method Versus Individual AssetGroup Method Versus Individual Asset
A Class of Assets (Furniture and A Class of Assets (Furniture and Fixtures)Fixtures)
An Individual Asset (A School Bus)An Individual Asset (A School Bus)
Capital Asset ClassificationCapital Asset Classification
Divide Between Major Class and Divide Between Major Class and SubclassSubclass
Major Class Usually equates to General Major Class Usually equates to General Ledger Asset Accounts For Ease in Ledger Asset Accounts For Ease in Financial ReportingFinancial Reporting
LandLand
Potential SubclassesPotential Subclasses
-- Vacant Parcel (Deed)Vacant Parcel (Deed)-- Land Under a Building (Deed)Land Under a Building (Deed)-- Land Under the RoadsLand Under the Roads
LandLand
Includes the Cost of Preparing Land for Includes the Cost of Preparing Land for UseUse
Separate Land Cost from Cost of Separate Land Cost from Cost of Buildings or Improvements if all Three Buildings or Improvements if all Three are Purchased Togetherare Purchased Together
Park LandsPark Lands
Land ImprovementsLand Improvements
Fencing Fencing
Paving (i.e., Parking Lots)Paving (i.e., Parking Lots)
LightingLighting
Plumbing (e.g., water facets)Plumbing (e.g., water facets)
Landscaping??Landscaping??
BuildingsBuildings
Components:Components:
Building ShellBuilding ShellRoofRoofElevatorElevatorElectrical SystemElectrical SystemPlumbing SystemPlumbing SystemHeating/Air Conditioning SystemHeating/Air Conditioning System
Buildings ImprovementsBuildings Improvements
Sometimes These Costs are Just Sometimes These Costs are Just Capitalized as BuildingsCapitalized as Buildings
Alarm SystemsAlarm Systems
CarpetingCarpeting
Shelving and CabinetsShelving and Cabinets
Clock SystemsClock Systems
Buildings ImprovementsBuildings Improvements
Public Address & Speaker Systems Public Address & Speaker Systems Where Wiring Is "Built-in".Where Wiring Is "Built-in".
CurtainsCurtains
VehiclesVehicles
Vehicle TagsVehicle Tags
All Rolling StockAll Rolling Stock
TrucksTrucks
AutomobilesAutomobiles
BusesBuses
Machinery and EquipmentMachinery and Equipment
Computer EquipmentComputer Equipment
Furniture and FixturesFurniture and Fixtures
WeaponsWeapons
Heavy EquipmentHeavy Equipment
Radios and Cell PhonesRadios and Cell Phones
Historical Treasures and Historical Treasures and Works of ArtWorks of Art
PaintingsPaintings
StatutesStatutes
Totem PolesTotem Poles
GASBS 34 RequirementsGASBS 34 Requirements
Governments Should Capitalize Governments Should Capitalize Works Works Of Art, Historical Treasures, And Of Art, Historical Treasures, And
Similar Assets At Their Historical Similar Assets At Their Historical Cost Cost Or Fair Value At Date Of Or Fair Value At Date Of Donation Donation (Estimated If Necessary) (Estimated If Necessary) Whether Whether They Are Held As Individual They Are Held As Individual Items Or Items Or In A CollectionIn A Collection.
GASBS 34 RequirementsGASBS 34 Requirements
Governments Are Encouraged, But Not Required, To Governments Are Encouraged, But Not Required, To Capitalize A Collection (And All Additions To That Capitalize A Collection (And All Additions To That Collection) Whether Donated Or Purchased That Meets Collection) Whether Donated Or Purchased That Meets All Of The Following Conditions. The Collection Is:All Of The Following Conditions. The Collection Is:
Held For Public Exhibition, Education, Or Held For Public Exhibition, Education, Or Research Research In Furtherance Of Public Service, Rather In Furtherance Of Public Service, Rather Than Than Financial GainFinancial Gain
Protected, Kept Unencumbered, Cared For, And Protected, Kept Unencumbered, Cared For, And PreservedPreserved
Subject To An Organizational Policy That Requires Subject To An Organizational Policy That Requires The Proceeds From Sales Of Collection Items To The Proceeds From Sales Of Collection Items To
Be Used To Acquire Other Items For Collections.Be Used To Acquire Other Items For Collections.
IntangiblesIntangibles
Software – Mainframe, Site Licenses, Software – Mainframe, Site Licenses, Upgrades, MaintenanceUpgrades, Maintenance
Radio Station LicenseRadio Station License
InfrastructureInfrastructure
Storm sewersStorm sewers
BridgesBridges
Parks (excluding land)Parks (excluding land)
RoadsRoads
TrailsTrails
IslandsIslands
Street lightsStreet lights
Traffic signalsTraffic signals
SignageSignage
BettermentsBetterments
What Are Betterments?What Are Betterments?
Extends The Estimated LifeExtends The Estimated Life
Exceeds A Certain CostExceeds A Certain Cost
A Big IssueA Big Issue
It Depends Upon The Property RecordIt Depends Upon The Property Record
GAAP ValuesGAAP Values
• Historical Cost
• Cost Of Capital Assets In Accordance With Costs
• Prevailing At Date Of Construction
• Installation
• Fair Market Value
• Estimated Amount At Which The Capital Asset Might Exchange Between Buyer And Seller Neither Under
Compulsion, Having Reasonable Knowledge Of All Relevant Facts – With Equity To Both
Inventorying Capital AssetInventorying Capital Asset
FrequencyFrequency
ProcessProcess
DiscrepanciesDiscrepancies
FrequencyFrequency
Original InventoryOriginal Inventory
Re-Inventory – At Least AnnuallyRe-Inventory – At Least Annually
ResponsibilityResponsibility
The Inventory ProcessThe Inventory Process
Project Planning MeetingProject Planning Meeting
InclusionsInclusionsExclusionsExclusionsTagging @ the Same Time?Tagging @ the Same Time?Utilizing Existing InventoriesUtilizing Existing Inventories
When To InventoryWhen To Inventory
• There Is No Correct TimeThere Is No Correct Time
• During The Normal WorkdayDuring The Normal Workday
• Nights Or WeekendsNights Or Weekends
Inventory - LandInventory - Land
– Listed By ParcelListed By Parcel
– Assessor's Parcel NumberAssessor's Parcel Number
– Lot, Block, TrackLot, Block, Track
– UseUse
– LocationLocation
Inventory – Machinery and Inventory – Machinery and EquipmentEquipment
– QuantityQuantity
– DescriptionDescription
– ManufacturerManufacturer
– Serial NumberSerial Number
– Year AcquiredYear Acquired
Inventory – Do’s and Don’tsInventory – Do’s and Don’ts
– Don't Start Inventories with Existing Inventory ListsDon't Start Inventories with Existing Inventory Lists
– Inventory by LocationInventory by Location
– Provide Advance NoticeProvide Advance Notice
– Avoid AbbreviationsAvoid Abbreviations
– Generic NameGeneric Name
– Write LegiblyWrite Legibly
Inventory – Do’s and Don’tsInventory – Do’s and Don’ts
• Organize Thoughts Before Making NotationsOrganize Thoughts Before Making Notations
• Review Field NotesReview Field Notes
• Use Available Resources ---- Ask QuestionsUse Available Resources ---- Ask Questions
• Maintain Contact with Those Responsible for the Maintain Contact with Those Responsible for the ProjectProject
• If You're Behind/Ahead of Schedule---Keep If You're Behind/Ahead of Schedule---Keep People AdvisedPeople Advised
Changes in Capital AssetsChanges in Capital Assets
• AdditionsAdditions
• DisposalsDisposals
• TransfersTransfers
• SurplusSurplus
AdditionsAdditions
• Purchased or ConstructedPurchased or Constructed
• LeasedLeased
• ContributedContributed
• Acquired Via TradesAcquired Via Trades
DisposalsDisposals
• Trade-insTrade-ins
• Sales – Sealed Bids - AuctionSales – Sealed Bids - Auction
• Cannibalization - BusesCannibalization - Buses
• Contributed to Other GovernmentsContributed to Other Governments
TransfersTransfers
• Between DepartmentsBetween Departments
• Between BuildingsBetween Buildings
• Any Budget Impact?Any Budget Impact?
The Eight “W’s” to TaggingThe Eight “W’s” to Tagging
• Why Tag?Why Tag?
• Which Assets to Tag?Which Assets to Tag?
• What Types of Tags to Use?What Types of Tags to Use?
• Where to Purchase the Tags?Where to Purchase the Tags?
• What Should Appear on the Tag?What Should Appear on the Tag?
• When to Tag?When to Tag?
• Who Tags?Who Tags?
• Where is the Tag Placed?Where is the Tag Placed?
Tagging PurposeTagging Purpose
• Primary Purpose of a Tagging is toPrimary Purpose of a Tagging is to
Maintain a Positive Identification ofMaintain a Positive Identification of
Assets Owned by the GovernmentAssets Owned by the Government
Why Tag?Why Tag?
– Quick and Accurate Method of IdentifyingQuick and Accurate Method of Identifying
– Facilitate Re-inventoryFacilitate Re-inventory
– Controls the Location of AssetsControls the Location of Assets
– Assists in Maintaining AssetsAssists in Maintaining Assets
– Provides Common Ground for CommunicationProvides Common Ground for Communication
Which Assets Should Be Which Assets Should Be Tagged?Tagged?
• Influenced by Purpose of TaggingInfluenced by Purpose of Tagging
• Accounting IssuesAccounting Issues
• Property AccountabilityProperty Accountability
• Types of ActivitiesTypes of Activities
• Cost of TaggingCost of Tagging
What Type of Tags What Type of Tags Should We Use?Should We Use?
– MetalMetal
– Decal TypeDecal Type
– Bar CodedBar Coded
– Stencil/PaintedStencil/Painted
What Do We Purchase Tags?What Do We Purchase Tags?
• Office Equipment DealerOffice Equipment Dealer
• Yellow Pages of Telephone BookYellow Pages of Telephone Book
• The Type of Adhesive Must Be ConsideredThe Type of Adhesive Must Be Considered
• Prices VaryPrices Vary
What Should Be Imprinted on What Should Be Imprinted on the Tag?the Tag?
• Identifying MarkIdentifying Mark
• Numbering SystemNumbering System
– SequentialSequential
– ChronologicalChronological
When To Tag?When To Tag?
• Tag With Initial InventoryTag With Initial Inventory
• Normal Working Periods vs Nights and Normal Working Periods vs Nights and WeekendsWeekends
Who Should Tag?Who Should Tag?
• Accounting DepartmentAccounting Department
• Purchasing DepartmentPurchasing Department
• Receiving DepartmentReceiving Department
• Asset User (Police Department)Asset User (Police Department)
Where Should The Where Should The Tag Be Placed?Tag Be Placed?
• Placement Where Number Can Be Identified Placement Where Number Can Be Identified Without Disturbing The OperationWithout Disturbing The Operation
• Placement Allows For Easy Periodic Placement Allows For Easy Periodic Inventory TakingInventory Taking
• Placement Should Be ConsistentPlacement Should Be Consistent
Depreciating Capital AssetsDepreciating Capital Assets
The MethodThe Method
The Estimated Useful LivesThe Estimated Useful Lives
Residual ValuesResidual Values
Fully Depreciated Capital AssetsFully Depreciated Capital Assets
Depreciating Capital AssetsDepreciating Capital Assets
When to Start Calculation DepreciationWhen to Start Calculation Depreciation
Charging to Applicable FunctionsCharging to Applicable Functions
Capital Assets For Resale –Capital Assets For Resale –Governmental FundsGovernmental Funds
Acquired Via Foreclosure and DonationsAcquired Via Foreclosure and Donations
Fund Balance Should Be ReservedFund Balance Should Be Reserved
Capital Assets Purchased Via Capital Assets Purchased Via Capital Lease –Capital Lease –
Governmental FundsGovernmental Funds
Debit - ExpendituresDebit - Expenditures
Credit – Other Financing Sources – Credit – Other Financing Sources – Inception of Capital LeaseInception of Capital Lease
Capital Assets Purchased By Capital Assets Purchased By Federal GovernmentFederal Government
Reversionary InterestReversionary Interest
Normally Reported As Governmental Normally Reported As Governmental AssetAsset
Capital Asset NoteCapital Asset NoteAdjusted
Balance Balance
7/1/02 Additions Deductions 6/30/03
Governmental activities:
Capital assets not being depreciated:
Land 11,612,251$ 434,038$ 30,000$ 12,016,289$
Construction in progress 186,870 5,254,702 29,673 5,411,899
Total capital assets not being depreciated 11,799,121 5,688,740 59,673 17,428,188
Depreciable capital assets:
Buildings 17,846,132 433,131 322,656 17,956,607
Improvements other than buildings 2,730,637 634,665 - 3,365,302
Machinery and equipment 4,875,353 499,778 - 5,375,131
Infrastructure 16,305,937 1,299,620 - 17,605,557
Total depreciable capital assets 41,758,059 2,867,194 322,656 44,302,597
Total capital assets 53,557,180 8,555,934 382,329 61,730,785
Accumulated depreciation:
Buildings 6,517,492 413,654 8,594 6,922,552
Improvements other than buildings 1,073,679 145,294 - 1,218,973
Machinery and equipment 2,721,992 451,734 - 3,173,726
Infrastructure 6,390,599 385,047 - 6,775,646
Total accumulated depreciation 16,703,762 1,395,729 8,594 18,090,897
Governmental activities capital assets, net 36,853,418$ 7,160,205$ 373,735$ 43,639,888$
Reporting Prior YearReporting Prior YearCapital AssetsCapital Assets
Capital assets 53,557,180 Accumulated depreciation 16,703,762 Net assets 36,853,418 (To record capital assets on system @ 6/30/02)
Reporting Prior YearReporting Prior YearCapital AssetsCapital Assets
Depreciation - general government 102,585
Depreciation - public safety 252,904
Depreciation - public works 498,101
Depreciation - culture and recreation 132,650
Depreciation - housing and development 7,744
Depreciation - education 401,745
Accumulated depreciation 1,395,729 (To record fiscal year 2003 depreciation expense)
Reporting Capital Reporting Capital Asset AdditionsAsset Additions
Capital assets 8,526,261 Contributions 4,801,323 Expenditures - general government 36,038 Expenditures - public safety 61,397 Expenditures - public works 76,389 Expenditures - housing and development 19,729 Expenditures - capital outlay 3,531,385 (To capitalize fiscal year 2003 capital outlay additions)
Reporting Capital Reporting Capital Asset DeletionsAsset Deletions
Accumulated depeciation 8,594 Disposition of capital assets 344,062 Capital assets 352,656 (To record disposition of capital asset in fiscal year 2003)
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