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HomeMy WebLinkAboutReso 008-96FixedAssetsPolicy RESOLUTION NO. 8 - 96 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN ESTABLISHING A POLICY ON TIlE CAPITALIZATION OF FIXED ASSETS IN THE GENERAL FIXED ASSET ACCOUNT GROUP OF THE CITY FINANCIAL RECORDS WHEREAS, Generally Accepted Accounting Principles (GAAP) require complete and accurate reporting of fixed assets; and WI-IEREAS, the exact capitalization threshold for fixed assets is not mandated and the entity is encouraged to use its specific conditions in establishing a threshold; and WHEREAS, Staff.has developed a policy with a reasonable threshold which records items with a cost of at least $1,000; and WHEREAS, the policy also contains an additional control feature for items of less than $1,000 by maintaining management records of these items; and WHEREAS, the proposed policy is intended to assure that the City resources continue to be controlled and managed in an efficient manner. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does hereby adopt the attached policy for the Capitalization of Fixed Assets in the General Fixed Asset Account Group. (Exhibit A). BE IT FURTHER RESOLVED that Staff.is hereby authorized to proceed with any necessary adjustments to the City Financial records to implement this policy. Items of a material nature shall be disclosed as part of the notes to the financial statements included as part of the Comprehensive Annual Financial Report. PASSED, APPROVED AND ADOPTED this 23rd day of January, 1996. AYES: Councilmembers Barnes, Burton, Howard, Moffatt and Mayor Houston NOES: None ABSENT.' None Mayor K2/G/1 - 2 3- 9 6/resas s e t. doc CITY OF DUBLIN POLICY ON THE CAPITALIZATION AND RECORDING OF FIXED ASSETS (Proposed January 23, 1996) General Purpose Complete and accurate reporting of fixed assets is required by generally accepted accounting principles. Also, there is a public trust involved in the collection and expenditure of public funds. A well maintained system of fixed assets demonstrates the government's responsibility for assets that have been acquired with taxpayer's dollars. There is also a recognition that resources are limited and the investment in measures to control resources must be reasonably related to an ability to an overall policy. The focus of this policy is on the treatment of assets which are not recorded within a "proprietary fund" in the accounting records of the City. Staff responsible for the implementation of this policy shall interpret and implement the policy in a manner consistent with the stated purpose. Capitalization Threshold For purposes of this policy, the term "capitalize" means to add a long-term tangible asset to the City's inventory of fixed assets which are recorded in the General Fixed Asset Account Group (GFAAG). To be classified as a fixed asset which will be capitalized, a specific piece of property must possess the following three attributes: (1). It must be tangible nature; (2) It must have a useful life of at least three years; and (3) It must have an original cost of at least one thousand dollars ($1,000). Public domain or infrastructure assets are not required to be reported in the GFAAG. The City of Dublin does not capitalize the costs of infrastructure assets. Categories of General Fixed Assets The following are the categories of General Fixed Assets to be recorded in the City Financial Records supporting entries in the General Fixed Asset Account Group: Land (excluding that related to infrastructure such as street right of way) Buildings Machinery & Equipment Furniture and Fixtures General Fixed Asset Account Group The General Fixed Assets Account Group (GFAAG) is used to maintain control and cost information for all fixed assets other than those accounted for in the proprietary funds. General fixed assets are recorded as expenditures in governmental funds at the time the assets are acquired and the liability is incurred. These assets are capitalized at cost in the general f~xed assets account group. EXHIBIT A ~ Determination of Cost All general fixed assets which meet the capitalization threshold, and are acquired either by purchase or a donation to the City, will be recorded in the General Fixed Assets Account Group. Purchased fixed assets are valued at cost of the item. Cost ~cludes purchase price, sales tax, freight, installation and any other costs associated with placing the asset into service. Donated fixed assets are recorded at their fair value at the time received by the City. All Fixed assets owned by the City should be substantiated with adequate records. Expendable Asset Record Keeping This category is established to provide control of assets purchased with public funds, which may not otherwise meet the established capitalization threshold limit of items with a cost of less than $1,000. For management purposes a listing shall be maintained of items with an initial cost of less than one thousand dollars (<$1,000), but would otherwise meet the criteria for a capitalized f~xed asset. Typically this will include equipment and furniture used in operations. Items shall be marked as property of the City of Dublin, however, the value will not be capitalized in the General Fixed Asset Account Group. Disposal of items shall be reported to and approved by the Assistant City Manager / Administrative Services Director or his/her designee.