05-23-2005 Council Packet - Laserfiche WebLink

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% REQUEST FOR COUNCIL ACTION DATE: May 23,2005 ITEM NO: / 3 Ofir Department Approvals j/ / Administrator Reviewed: Agenda Section: Name Tom ^/fi. City Administrator s Title Finance Director 17^ ( Report Item Description: Fixed Asset Capitalization The Governmental Accounting Standards Board (GASB) has established new reporting retjuirements for fixed assets. In order to comply with these requirements the City needs to establish certain guidelines regarding the capitalization of fixed assets. The City has recorded fixed assets based on whether the fixed asset is associated with a proprietary fund or associated with a governmental fund (general fixed asset). Proprietary Funds are the business type operations of the City. These funds include the Water, Sanitary Sewer, Storm Water, Golf Course, and Insurance operations. 1 he City has recorded the costs of the fixed assets in these funds and has established useful lives for the various classes and has been re;'^-rding depreciation based on the straight line method. A fixed asset in a proprietary fund must have an initial cost greater than $1,000 and have an estimated useful life longer than one y ear. There are very few proprietary fund fixed assets in the $1,000 range and those that were carried at a cost of less than $1,000 have been removed. Governmental Funds are the non-business type funds of the City. These funds typically are used to account for the tax-supported activities, and include the following: general fund, special revenue funds, debt service funds, and capital projects funds. Fixed assets acquired through these funds have been recorded if they fall into such categories as maintenance equipment, buildings, office equipment, public safety vehicles and equipment, street and park maintenance vehicles, park improvements, etc. These fixed assets have been referred to as General Fixed Assets and historically depreciation has not been reflected in the financial statements, although the City has been tracking depreciation on these assets. Such items as street improvements were not recorded. Effective with the 2004 fiscal year the City is required to start recording all fi.\ed assets costs and depreciation. Although a listing of general fixed assets has been maintained there are many, many items recorded that arc of very minimal cost and more of a maintenance or supply item when considered in retrospect. In addition there are many items listed that are very difficult to track, such as most small tools, minor office equipment, calculators, desks, chairs, files, etc.