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Capital Assets MARICOPA COUNTY INTERNAL POLICY Policy Number: A2507 Policy Title: Current Adoption 06-26-2019 CAPITAL ASSETS Date: Current 06-26-2019 Implementation Date: Board Agenda C-18-19-010-6-00 Approved by: Number: BOARD OF SUPERVISORS Original Adoption 04-06-2005 Date: I. PURPOSE The purpose of the Capital Asset Policy is to provide Maricopa County Departments and Special Districts a comprehensive guide to be utilized in the definition, organization, and reporting of financial transactions for capital assets, capital improvement projects, and infrastructure assets to ensure consistent management of all capital asset activity. This policy defines the overall responsibility for capital asset expenditures. Specific information and detailed procedures are contained in the Capital Asset Manual and Capital Improvement Projects & Infrastructure Manual located on the Department of Finance MYMC site. II. APPLICATION This policy applies to all Maricopa County appointed departments as well as the Flood Control District of Maricopa County, the Maricopa County Library District, and the Maricopa County Stadium District (Special Districts). The Board of Supervisors is authorized to jointly adopt policies applying to the Special Districts under the Intergovernmental Agreement, C-06-18- 393-6-00, approved on April 11, 2018. This policy also applies to employees of County elected offices unless the elected official has implemented a similar policy specific to their office. III. DEFINITIONS A. Acquisition: A newly acquired asset by purchase, annexation or donation. B. Acquisition Costs: Costs incurred to purchase, construct, or develop a capital asset, including ancillary costs and costs incurred to put the asset in its intended use (i.e., legal and title fees, closing costs, appraisal and negotiation fees, land preparation costs, demolition costs, taxes, and shipping/transportation charges). Policy Title: Policy Number: A2507 CAPITAL ASSETS Current Adoption 06-26-2019 Date: C. Appointing Authority: An Elected Official, the single administrative or executive head of a Department/Special District, or the designated representative authorized to act in this capacity. D. Betterment or Improvement: An increase in the value of a capital asset due to an improvement, upgrade, and/or enhancement, that increases future benefits, lengthens the estimated useful life, and/or increases the service capacity of an existing capital asset beyond its previously assessed standard of performance. A betterment must meet the capitalization threshold of $5,000. E. Capital Asset: Capital assets are tangible and intangible assets acquired for use in operations that will benefit more than a single fiscal period. This includes equipment, machinery, vehicles, infrastructure, and improvements other than buildings with an estimated useful life of over one year and an acquisition cost of $5,000 or more, and all buildings and land regardless of value. Upgrades and enhancements of existing capital asset are also considered a capital asset. F. Capital Improvement Project: A major, non-recurring project related to an individual capital improvement project, or to a program that is implemented through a Capital Project Fund. G. Capital Projects Fund: A fund that accounts for proceeds of bond issues and other resources expended for the acquisition, construction or reconstruction of major capital facilities. Capital Projects Funds’ purchases are accounted for in the Government Wide Statement of Net Assets. H. Capitalization Threshold: A dollar amount that determines if the item acquired should be capitalized for the proper financial reporting and tracking of a capital asset. Maricopa County’s capitalization threshold is $5,000 for equipment, machinery, vehicles, infrastructure, and improvements other than buildings. Land and buildings are capitalized regardless of value. Asset acquisition costs below this amount shall be expensed. I. Construction in Progress: Capitalized costs related to a capital asset (i.e., a capital improvement project) that is not yet substantially complete and placed into service. J. Department: Refers to the department, office or agency under budgetary responsibility of the Maricopa County Board of Supervisors or the Maricopa County Special District(s) Board of Director(s). K. Depreciation: The allocation of the cost of property over its economic (useful) life. L. Disposition: The process of eliminating an asset from the CGI Advantage financial system due to sale, destruction, obsolescence, loss/theft, etc. This process is initiated by the owner Department. M. Elected Official: A person who is chosen by ballot to an office or post of authority by eligible voters to represent them in a public capacity and perform the duties for which they were elected. Page 2 of 7 Policy Title: Policy Number: A2507 CAPITAL ASSETS Current Adoption 06-26-2019 Date: N. Intangible Capital Asset: A nonfinancial asset that lacks physical substance and has an initial useful life that extends beyond a single fiscal period (e.g., computer software, patents). O. Salvage Value: The estimated amount that can be realized from the Disposition of a retired asset at the end of its estimated useful life. Salvage value for all County/Special District assets is zero. P. Special District: Flood Control District of Maricopa County, Maricopa County Library District, or Maricopa County Stadium District. Q. Tangible Capital Asset: A capital asset with a physical form with a useful life greater than one fiscal period. R. Useful Life: The time period, in years, over which a capital asset is expected to provide service to the County/Special District. IV. POLICY A. Each Department/Special District will assign a Capital Asset Designee (see Section V. for responsibilities). B. The Department of Finance will utilize the CGI Advantage online financial system to capture and report the data associated with capital assets and expenditures. All capital asset transactions (e.g., additions, deletions, transfers, etc.) must have appropriate supporting documentation attached within CGI Advantage. Please see the Capital Asset Manual for further clarification and instructions. C. All items to be capitalized and entered into the CGI Advantage financial system by the Departments must be expended out of a capital asset object code. Amounts paid for non- capital items must be expended out of a non-capital object code. For further clarification of specific capital asset object codes, please review the Capital Asset Manual and the County Chart of Accounts. D. Capital assets will be recorded at actual cost at the date of acquisition. Actual cost includes all charges necessary to place the item in its intended location and condition for use, such as taxes, freight, title search fees and installation charges. If the original cost of a capital asset is unavailable, the estimated fair market value at the date of acquisition should be used to value the asset. Assets that meet the capitalization criteria (useful life greater than one year and meet the capitalization threshold) shall be capitalized and entered into the CGI Advantage financial system. For further clarification, please review the Capital Asset Manual and the Capital Improvement Projects & Infrastructure Manual. The following asset classifications are utilized in the financial system. Page 3 of 7 Policy Title: Policy Number: A2507 CAPITAL ASSETS Current Adoption 06-26-2019 Date: 1. Land: All land (regardless of value) including tracts and parcels of land, easements, and rights-of-way, shall be capitalized and entered into the CGI Advantage system. Land is capitalized at its original purchase price plus any costs incurred to put the land in the condition necessary for its intended use, such as legal and title fees, relocation and excavation costs. 2. Improvements Other than Buildings: All improvements with an acquisition cost of $5,000 or more and a useful life greater than one year shall be capitalized and entered into the CGI Advantage system. Assets in this category include land improvements, leasehold improvements, major technology and network improvements, retaining walls, fences, parking lots, landscaping, etc. 3. Buildings: All buildings (regardless of value) shall be capitalized. The capitalized cost will include the cost to build or the purchased cost at the time of acquisition, including architect and engineer's fees, permits, insurance during construction, interest during construction and other administrative (indirect) costs and appraisals. Cost of land acquisition is not included as part of building costs, but should be included as a land asset. 4. Machinery and Equipment: All moveable assets that are equal to or exceed $5,000 in original cost and with a useful life greater than one year. These items must be tagged with numbered property tags where possible. This classification may also include intangible assets such as computer and system software. Generally, this classification includes tangible and intangible personal property including computer servers, mainframe system software, office machines, major machinery and construction equipment, audio-visual and communication equipment, medical equipment, and recreational equipment. 5. Vehicles: All vehicles with an acquisition cost of $5,000 or more and with a useful life greater than one year, including construction vehicles, passenger vehicles, trucks, trailers, aircraft, watercraft, and other mechanized vehicles. Costs incurred to get the vehicle ready for its intended use, such as light bars, attached
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