County Commissioner Ordinance - November 1995�
ORDZNANCE NO
1995-�
AN ORDINANCE ESTABLZSHING A FIXED ASSET
CAPITALIZATION POLICY
BEIIT ORDAZNED by the Board of County Commissioners of
Gibson County, Indiana that:
wHEREAS, the Board of County Commissioners is the governing
body of Gibson County, Indiana; and
wHEREAS, the Board of County Commissioners desires to
establish a capitalization policy for the County and its various
departments.
NOW, THEREFORE, BE IT ORDAINED by the Soard of County
Commissioners of Gibson County, Zndiana as follows:
SECTION 1. - DEFINITIONS AND PROVZSZONS:
For the purpose of this ordinance, the following definitions
shall apply unless the context clearly indicates or requires a
different meaning.
"Tanqible Assets", Assets that can be observed by one or
more of the physical senses. They may be seen and touched and, in
some environments, heard and smelled.
��Fixed Asset", Tanqible assets of a durable nature employed
in the operating activities of the unit and that are relatively
permanent and are needed for the production or sale of goods or
services are termed property, plant and equipment or fixed
assets. These assets are not held for sale in the ordinary
course of business. This broad qroup is usually separated into
classes according to the physical characteristics of the items
(e.g. land, buildinqs, improvements other than buildinqs,
machinery and equipment, furniture and fixtures).
LAND
This County will capitalize all land purchases,
reqardless of cost.
Exceptions to land capitalization are land purchased
outriqht, as easements, or rights-of-way for infrastructure.
Examples of infrastructures are roads and streets, street
lighting systems, bridges, overpasses, sidewalks, curbs,
street signs, viaducts, wharfs, and storm water collection.
Original cost of land will include the full value given
to the seller, including relocation, legal services
incidental to the purchase (includinq title work and
opinion), appraisal and negotiation fees, surveying and
costs for preparing the land for its intended purpose
(including contractors and/or County workers [salary and
benefits)), such as demolishinq buildings, excavating, clean
up, and/or inspection.
A department will record donated land at fair market
value on the date of trans�er plus any associa*ed costs.
Purchases made using Federal or State funding will
follow the source funding policies and above procedures.
MACHINERY AND EQUIPMENT:
The definition of machinery and equipment is: an
apparatus, tool, or conglomeration of pieces to form a tool.
The tool will stand alone and not become a part of a basic
structure or buildinq.
This County will capitalize and taq items with an
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individual value equal to or greater than $750. Machinery
combined with other machinery to form one unit with a total
value grater than the above mentioned limit will be one
unit.
Shipping charqes, consultant fees, and any other cost
directly associated with the purchase, delivery, or set up,
(including contractors and/or County works [salary and
benefitsl), which makes such equipment operable for its
intended purpose will be capitalized.
Improvements or renovations to existinq machinery and
equipment will be capitalized only if the result of the
change meets all of the following conditions:
1) total costs exceeds $750.
2) the useful life is extended two or more years; and
3) the total costs will be greater than the current
book value and less than the fair market value.
Examples include:
A work truck beinq equipped with screens, lights, or
radios for use as a single unit throughout its life
expectancy is considered one unit.
If Sheriff cars are constantly chanqing light bars or
radios to other vehicles, the County will capitalize each
piece of equipment separately, if it meets the required
dollar amount.
A department�s computer (CPU, monitor, keyboard, and
printer) is considered one unit.
A department will record donated machinery and
equipment at fair market value on the date of transfer with
any associated costs.
Purchases made using Federal or State funding will
follow the source fundinq policies and above procedures.
BUILDINGS;
A department will capitalize buildings at full cost
with no subcategories for tracking the cost of attachments.
Examples of attachments are roofs, heatinq, coolinq,
plumbing, lighting, or sprinkler systems, or any part of the
basic building. The department will include the cost of
items designed or purchased exclusively for the building.
A department's new building will be capitalized only if
it meets the following conditions:
1) the total cost exceeds $5,000. and
2) the useful life is greater than two years.
A department improving or renovating an existing
building will capitalize the cost only if the result meets
all of the following conditions.
1) the total cost exceeds $5,000.
2) the useful life is extended two or more years, and
3) the total cost will be greater than the current
book value and less than the fair market value.
Capital building costs will include preparation of land
for the building, architectural and engineering fees, bond
issuance fees, interest cost (while under construction),
accounting costs if material, and any costs directly
attributable to the construction of a building.
A department will record donated buildings at fair
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market value on the date of transfer with any associated
costs.
Purchases made using Federal or State funding will
follow the source funding policies and above procedures.
IMPROVEMENTS OTHER THAN BOILDINGS:
The definition of this group is improvements to land
for better enjoyment, attached or not easily removed, and
will have a life expectancy of greater than two years.
This County will capitalize new improvements other than
buildings only if it meets the followinq conditions:
1) the total cost exceeds $5,000. and
2) the useful life is qreater than two years.
A department will capitalize improvements or
renovations to existing improvements other than buildings
only if the result meets the following conditions:
3) the total cost exceeds $5,000.
2) the asset�s useful life is extended two or more
years, and
3) the total cost will be greater than the current
book value and less than the fair market value.
A department's donated improvements other than
buildinqs will be recorded at fair market value on the date
of transfer with any associated costs.
Purchases made using Federal or State funding will
follow the source funding policies and above procedures.
��Historical Cost", The cash equivalent price exchanged for
qoods or services at the date of acquisition. Land, buildings,
equipment and most inventories are common examples of items
recoqnized under the historical cost attribute.
"Enterprise Funds", Those funds used to account for
operations (a) that are financed and operated in a manner similar
to private business enterprise - where the intent of the
governing body is that the costs (expenses, including
depreciation) of providinq goods or services to the general
public on a continuinq basis be financed or recovered primarily
through user charges; or (b) where the governing body has decided
that periodic determination of revenues earned, expenses
incurred, and/or net income is appropriate for capital
maintenance, public policy, management control, accountability
and other purposes.
SECTION 2. - RECORDING AND ACCOUNTING:
The County and its various departments shall classify
capital expenditures as capital outlays within the fund from
which the expenditure was made. The cost of property, plant and
equipment includes all expenditures necessary to put the asset
into position and ready for use. For purposes of recording fixed
assets of the County aiid its Departments, the valuatior. of assets
shall be based on historical cost or where the historical cost is
indeterminable, by estimation for those assets in existence.
When an asset is purchased for cash, the acquisition is
simply recorded at the amount of cash paid, including all outlays
relating to its purchase and preparation for intended use.
Assets may be acquired under a number of other arrangements
including:
1. Assets acquired for a lump-sum purchase price
2. Purchase on deferred payment contract
3. Acquisition under capital lease
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4. Acquisition by exchange of nonmonetary assets
5. Acquisition by issuance of securities
(. Acquisition by self-construction
7. Acquisition by donation or discovery
An asset reqister (prescribed form 211) shall be maintained
to provide a detail record of the capital assets of the
governmental unit.
SECTION 3. - SAFEGUARDING OF ASSETS:
Be it ordained that accountinq controls be designed and
implemented to provide reasonable assurances that:
1. Capital expenditures made by the County and its various
Departments be in accordance with management's
authorization as documented in the minutes.
2. Transactions be recorded as necessary
preparation of financial statements in
generally accepted principles.
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to permit
conformity with
Adequate detail records be maintained to assure
accountability for County owned assets.
Access to assets be permitted in accordance with
manaqement's authorization.
5. The recorded accountability for assets be compared with
the existing assets at least every two years and
appropriate action be taken with respect to any
differences.
PASSED AP1D ORDAINED by the Board of County Commissioners of
Gibson County, Indiana this 6th day of November, 1995.
Attest:
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ANNE D. MYERS,
Gibson County Auditor
BOARD OF COMMISSIONERS OF GIBSON
COUNTY, INDIANA
�i� � �--,
OGE T. MYER , President
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HN G �ISSEL
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ALL C. PERKINS