Control Code: TANGIBLE CAPITAL ASSETS Classification/Capitalization Threshold/Amortization

Transcription

1 1 #9/09 TANGIBLE CAPITAL ASSETS Classification/Capitalization Threshold/Amortization Purpose: The purpose of the policy is to provide direction for recognizing and recording Tangible Capital Assets (TCA) on a consistent basis and in accordance with Public Sector Accounting Board (PSAB) 30. The principle issues in accounting for tangible assets are the recognition of the assets, the determination of their carrying amounts and amortization charges and the recognition of any related impairment losses, so that users of the financial statements can discern information about the municipality s investment in tangible capital assets and the changes in such investment. This policy applies to all departments within Camrose County. A number of recommendations for TCA have been established by Alberta Municipal Affairs & Housing (AMAH). These recommendations will be adopted by the County. Tangible Capital Asset: are non-financial assets having physical substance that: are used on a continuous basis by the County have useful lives extending beyond one year are not held for resale in the ordinary course of operations Subsequent expenditures on a recorded TCA that: increase output or service capacity increase the service life lower associated operating costs improve the quality of the output should be classified as betterments and capitalized accordingly. Any other expenditure should be considered a repair or maintenance and should be expensed in the period it is incurred. Amortization: The cost, less any residual value of a TCA with a limited life should be amortized over its useful life in a rational and systematic manner. The amortization method and Nov /08

2 2 #9/09 estimate of useful life of the remaining unamortized portion should be reviewed on a regular basis (as outlined in the table below or more frequently if needed) and revised when the appropriateness of a change can be clearly demonstrated. Useful life is normally the shortest of the asset s physical, technological, commercial or legal life. The County uses a straight-line method for calculating the annual amortization. The straight-line method assumes that the economic usefulness is the same each year. The amortization amount is determined by dividing the asset s original cost, less any residual value, by its estimated useful life in years. The County uses an estimated useful life not greater than the recommended maximum life in Appendix A. Procedure: It is the responsibility of the Manager of Financial Services to ensure that the asset records are current, accurate and complete. Department Heads are required to notify the Manager of Financial Services of the effective date when assets are disposed of, taken out of service, destroyed or replaced due to obsolescence, scrapping or dismantling. The Manager of Financial Services is responsible for adjusting the asset register, and recording a loss/gain on disposal. An asset inventory will be conducted annually to ensure the asset records agree with the actual stock. Scope: This policy addresses the following: Asset classifications (major & minor) Capitalization threshold for each asset classification Amortization method to be used The following table shows the classes, capitalization thresholds and amortization method to be used: Nov /08

3 3 #9/09 APPENDIX A: RECOMMENDED MAXIMUM USEFUL LIFE AND CAPITALIZATION THRESHOLD Asset Classes Major Minor Sub-class One Land Right-of-way Undeveloped right-of-way Parks General Land Improvements Parking lot Asphalt Playground structures Landscaping Fences Lakes/ponds Retaining walls Outdoor lighting Bike/jogging Paths Asphalt Landfill Pits Pads Transfer stations Machinery and Equipment Heavy construction equipment Fire equipment Police special equipment Fuelling stations Communications Radios Telephone systems Tools, shop and garage equipment Scales Bins Maximum Useful Life Volume Volume Variable 12 Capitalization Threshold All land will be recorded $5,000 $,000 Nov /08

4 4 #9/09 Office Furniture & Equipment Furniture Office equipment Audiovisual Photocopiers Computer Systems Hardware Software Vehicles Ambulances Fire Trucks Trucks, Vans, Cars Light duty Medium duty Heavy duty Engineered Structures Roadway system Bridges Overpass/interchange Curb & gutter Parkades Roads & streets Lanes/alleys ACP - hot mix Nonconforming Local/Collector/Arterial/Major Arterial Surface Concrete ACP - hot mix ACP - cold mix Chip seal Oil Subsurface Road signs Traffic control Information Lights Decorative Street Traffic Guard rails Ramps Sidewalks & para-ramps Light rail system `(* subject to weather conditions) Nov / Variable 60 * * * * * * * 5* * 40* 65 $5,000 $,000

5 5 #9/09 Water system Distribution system Mains Services Pump, lift and transfer stations Plants and facilities Structures Treatment equipment Mechanical Electrical General Pumping equipment Hydrants/fire protection Reservoirs Buildings Permanent Structures Frame Metal Concrete Portable Structures Metal Frame Leasehold improvements Wastewater system Collection system Mains Services Pump, lift and transfer stations Plants and facilities Structures Treatment equipment Mechanical Electrical General Pumping equipment Lagoons Storm system Collection system Mains Services Pump, lift and transfer stations Catch basins Outfalls Wetlands Retention ponds Nov /08 Variable $0,000 $5,000 $0,000 $0,000

6 6 #9/09 Treatment facility Fibre optics $,000 Nov /08