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Capital Assets: DID-1

  • Fiscal Management: D
Capital Assets: DID-1
Updated

Capital assets include land, improvements to land, easements, buildings, building improvements, vehicles, machinery, equipment, works of art and historical treasures, infrastructure, and all other tangible or intangible assets that are used in the School District’s operations and that have initial useful lives extending beyond a five year period.

Capital Assets will be divided into the following major asset classes:

  • Land
  • Buildings
  • Land Improvements
  • Equipment
  • Infrastructure
  • Construction in progress
  • Other

Land: Will be treated separately and will not be capitalized with any other asset. The cost of land should include the acquisition price, and the cost of initially preparing the land for its intended purpose such as grading, fill, and excavation. Land has an indefinite useful life.

Buildings: This class contains all permanent structures existing or the contracted construction of new buildings.

Land Improvements: This class contains permanent non-movable improvements, other than buildings, that add value to the land but do not have an indefinite useful life.

Equipment: This class contains machinery, vehicles, furnishings, technology equipment, noncapital equipment and other similar moveable items.

Infrastructure: This class contains assets that are stationary in nature and last longer than most capital assets, such as lighting systems, water systems, drainage systems, fiber optic systems, etc.

Construction in progress: This class is for costs incurred to construct or develop a tangible asset before it is ready to be placed into service.

Other: This class is for anything that doesn’t fit in the other 6 classes of assets.

The capitalization threshold for all asset classes will be $5,000 with the exception of those items purchased with a Federal grant. All assets purchased with a grant will be tagged and inventoried. The capitalization threshold will be applied to individual items. Discrete components of capital School District 27J, Brighton, Colorado assets with significantly shorter lives will be included in the cost of the larger asset with the component’s eventual replacement treated as a repair.

Depreciation of Assets:

Depreciation is the allocation of the total acquisition cost of a fixed asset over its estimated useful life. Land, construction in progress, and inexhaustible works of art or collectables are not depreciated. Annual depreciation will be calculated using the straight-line method:

Annual Depreciation = Cost – Salvage Value/ Useful life

The useful lives of capital assets will be estimated as shown in Table 1. The salvage value will be $0 for all capital assets.

Enterprise Funds

A “half-year” convention will be used when calculating depreciation expense, for qualifying inventories in the Enterprise funds, in the year in which the asset is purchased and disposed. The “half-year” convention works as follows: regardless of the month you placed the asset in service; you calculate and record depreciation expense as if the agency placed the asset in service on January 1 of the fiscal year. This results in recording depreciation expense for one-half of the first fiscal year of service. Likewise regardless of when an asset that is not fully depreciated is disposed, the asset is treated as if it was disposed on January 1 of the fiscal year and a half year of depreciation expense is recorded.

Government Funds

Assets bought with Government funds are not depreciated per the rules of both GAAP (Generally Accepted Accounting Principles) and GASB (Governmental Accounting Standards Board).

Donated Assets:

Donated assets will be recorded at their fair value as of the date of the donation.

Inventories:

Inventory tags will be affixed to all capital assets that cost $5,000 or more and have an initial useful life that extends five fiscal years. Tags will be issued by the Finance office.

Any asset purchased with a grant will be required to be tagged regardless of cost. Those tags will be issued by the Grant Accountant in the Finance office.

Physical inspection of all tagged capital assists will be done by the Finance office. Every tagged asset must be physically inspected at least once every three years. Excluding assets bought with Federal Funds, those assets will be inspected in accordance with the specific funds guidelines. School District 27J, Brighton, Colorado

The tracking of non-capitalized inventory is the responsibility of the individual school or department to do so on a routine basis.