08. Resolution 4452 - Fixed Asset PolicyRESOLUTION NO. 4452
A RESOLUTION ESTABLISHING A POLICY FOR THE CAPITALIZATION OF FIXED
ASSETS.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF KALISPELL,
MONTANA, AS FOLLOWS:
SECTION I. Fixed Assets shall be capitalized in
accordance with the following:
All purchased fixed assets are valued at cost where
historical records are available and at estimated
historical cost where no historical records exist.
Donated fixed assets are valued at their estimated fair
market value on the date received. The costs of normal
maintenance and repairs that do not add to the value of
the assets or extend asset lives are not capitalized.
Improvements are capitalized and, in the proprietary
funds, depreciated over the remaining useful lives of the
related assets.
General fixed assets are not capitalized in the funds
used to acquire or construct them. Instead, capital
acquisition and construction are reflected as
expenditures in governmental funds, and the related
assets are reported in the general fixed assets account
group. Assets in the general fixed assets account group
are not depreciated.
Public domain or infrastructure fixed assets are excluded
from the general fixed assets account group. Public
domain or infrastructure assets include roads, bridges,
curbs and gutters, streets and sidewalks, drainage
systems, lighting systems and similar assets that are
immovable and of value only to the governmental unit.
Therefore, the purpose of stewardship for capital
expenditures is satisfied without recording these assets.
Fixed assets purchased or acquired by proprietary fund
types are recorded in the individual fund making the
purchase. Any fixed assets donated specifically for an
enterprise fund are also recorded in that individual
fund. Depreciation has been provided for the property,
plant and equipment of the proprietary funds using the
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straight line method. The useful lives of these assets
have been estimated as follows:
Buildings 20-50 years
Improvements Other than Buildings 10-50 years
Machinery, Vehicles, and Equipment
With a Value Greater Than $2000
And Greater than a Five Year Life
Excluding Computer Equipment 5-20 years
Computer Equipment 3-5 years
Water & Sewer Lines, Pump Stations 10-50 years
PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF
THE CITY OF KALISPELL, MONTANA, THIS DAY OF MARCH, 1999.
Wm. E. Boharski
Mayor
Attest:
Theresa White
Clerk of Council
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Date: March 4, 1999
TO: Al Thelen
From: Amy Robertson
RE: Fixed Asset policy
The last time the fixed asset policy was addressed was 1985 by the finance committee. The
policy which we are using is $500 and a 5+ year life for capitalization. We are using $5,000 for
the Wastewater Treatment plant per our agreement with Evergreen. $5,000 is the federal fixed
asset value. The County has adopted a $2,000 amount and I understand the OPI (Office of
Public Instruction) has set that level for all the school districts in the state.
I would like to request that our policy be revised and updated.
Machinery and equipment costing $2,000+ with a 5 year life would be capitalized.
The one exception to that is computer equipment - I would like to track computer hardware
and depreciated it over a 3 year life in my internal service fund.
The following is the narrative from my notes to the financial statements (for the resolution)
1. Summary of Significant Accounting Policies -
Fixed Assets
All purchased fixed assets are valued at cost where historical records are available and at estimated historical cost
where no historical records exist. Donated fixed assets are valued at their estimated fair market value on the date
received. The costs of normal maintenance and repairs that do not add to the value of the assets or extend asset
lives are not capitalized. Improvements are capitalized and, in the proprietary funds, depreciated over the
remaining useful lives of the related assets.
General fixed assets are not capitalized in the funds used to acquire or construct them. instead, capital acquisition
and construction are reflected asexpenditures in governmental funds, and the related assets are reported in the
general fixed assets account group. Assets in the general fixed assets account group are not depreciated.
Public domain or infrastructure fixed assets are excluded from the general fixed assets account group. Public
domain or infra -structure assets include roads, bridges, curbs and gutters, streets and sidewalks, drainage systems,
lighting systems and similar assets that are immovable and of value only to the governmental unit. Therefore, the
purpose of stewardship for capital expenditures is satisfied without recording these assets.
Fixes assets purchased or acquired by proprietary fund types are recorded in the individual fund making the
purchase. Any fixed assets donated specifically for an enterprise fund are also recorded in that individual fund.
Depreciation has been provided for the property, plant and equipment of the proprietary funds using the straight
line method. The useful lives of these assets have been estimated as follows:
Buildings 20-50 years
Improvements Other than buildings 10-50 years
Machinery, vehicles and equipment 5-20 years
Water and Sewer lines, pump stations 10-50 years