Capital Assets Policy
Definitions and Provisions
Tangible Assets: Assets that can be observed by one or more of the physical senses.
Capital Assets: Tangible assets of a durable nature that are employed in the operating activities of the library, relatively permanent, and needed for the production of goods or services. This broad group is usually separated into classes according to the physical characteristics of the items (e.g. land, buildings, improvements other than buildings, furniture, and equipment). In addition, the aggregate of all books and similar materials with a useful life of more than one year, regardless of the original cost, will be considered capital assets.
Capital Outlays: Expenditures that benefit both the current and future fiscal periods. This includes the cost of acquiring land or structures; construction or improvement of buildings, structures, or other capital assets; and equipment purchases having an appreciable and calculable period of usefulness. These are expenditures resulting in the acquisition of or addition to the library’s general capital assets.
Historical Costs: The cash equivalent price exchanged for goods and services at the date of acquisition. Land, buildings, and equipment are common examples of items recognized under historical cost attribute.
Purchases made for land, furniture and equipment, buildings, or other improvements using federal or state funding will follow the source funding policies and the procedures outlined in the following paragraphs. Donated items will be recorded at fair market value on the date of transfer plus any associated costs.
Unless otherwise specified, an asset will be capitalized only if its total cost exceeds $2,000 and its useful life is two or more years.
The library will capitalize all land purchases, regardless of cost.
Original cost of land will include the full value given to the seller, including legal services incidental to the purchase (including title work and opinion), appraisal and negotiation fees, surveying and costs for preparing the land for its intended purpose (including contractors and/or library workers, salary and benefits).
Furniture and Equipment
The definition of furniture and equipment is an apparatus, tool, or conglomeration of pieces to form a tool. The tool will stand alone and not become a part of a basic structure or building.
Equipment combined with other equipment to form one unit with a total value greater than the above-mentioned limit will be one unit. A computer (CPU, monitor, keyboard, and printer) is considered one unit.
Shipping charges, consultant fees, and any other cost directly associated with the purchase, delivery, or setup (including contractors and/or library workers, salaries and benefits) of equipment operable for its intended purpose will be capitalized.
Buildings will be capitalized at full cost with no subcategories for tracking the cost of attachments. Examples of attachments are roofs, heating, cooling, plumbing, lighting, or any part of the basic building. Cost of items designed or purchased exclusively for the building will be included.
Capital building costs will include preparations of land for the building, architectural and engineering fees, bond issuance fees, interest cost (while under construction), accounting costs if material, and any costs directly attributable to the construction of the building.
Improvements Other Than Buildings
This asset group includes improvements to land, attached or not easily removed, and with a life expectancy of greater than two years. Examples are walks, parking areas and drives, fencing, retaining walls, outside fountains, planters, and other similar items.
Improvements do not include roads, streets, or assets that are of value only to the public. Roads, drives, or sidewalks installed on library-owned land that provide support to the public and to our facility are assets.
Improvements to Existing Assets
The cost of improvements or renovations to existing buildings, furniture and equipment, or improvements other than buildings will be capitalized only if the result of the change meets the following conditions:
The total cost exceeds $2,000.
The asset’s useful life is extended two or more years.
The improvement or renovation is more extensive than normal repairs and maintenance.
Recording and Accounting
The cost of property, plant, and equipment includes all expenditures necessary to put the asset into position and ready for use. For purposes of recording capital assets of the library, the valuation of assets shall be based on historical cost or, where the historical cost is indeterminable, by estimation for those assets in existence.
An asset register (prescribed form 211) shall be maintained to provide a detailed record of the capital assets of the library.
Safeguarding of Assets
Accounting controls are designed and implemented to provide reasonable assurances of the following:
Adequate detailed records are maintained to assure accountability for library-owned assets.
The recorded accountability for assets is compared with the existing assets at least every two years, with appropriate action taken with respect to any differences.
Capitalization Thresholds and Depreciation of Assets
Delphi Public Library Capitalization thresholds (the dollar values above which asset acquisitions are added to the capital asset accounts), depreciation methods and estimated useful lives of capital assets reported in the government-wide statements are as follows:
Improvements other than buildings
Improvements to existing assets
Machinery and equipment
Artwork and Historical Treasures
Estimated Useful Life
5 to 20 years
5 to 20 years
Depreciation will be calculated by:
Yearly Depreciation = Cost of Asset /Estimated Useful Life
Calculating a full year of depreciation in year of purchase
Accumulated Depreciation = Yearly Depreciation x Years in Service