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• • 4/13/76 employees required for the Federally assisted activities are not found in the other activi- ties of the State or local government, com- pensation will be considered reasonable to the extent that it is comparable to that paid for similar work in the labor market in which the employing government competes for the kind of employees involved. Com- pensation surveys providing data represen- tative of the labor market involved will be an acceptable basis for evaluating reason- ableness. b. Payroll and distribution _of time. Amounts charged to grant programs for personal services, regardless of whether treated as direct or indirect costs, will be based on payrolls documented and approved in accordance with generally accepted prac- tice of the State or local agency. Payrolls must be supported by time and attendance or equivalent records for individual em- ployees. Salaries and wages of employees chargeable to more than one grant program or other cost objective will be supported by appropriate time distribution records. The method used should produce an equitable distribution of time and effort. 11. Depreciation and use allowances. a. Grantees may be compensated for the use of buildings, capital improvements, and equipment through use allowances or depre- ciation. Use allowances are the means of providing compensation in lieu of deprecia- tion or other equivalent costs. However, a combination of the two methods may not be used in connection with a single class of fixed assets. b. The computation of depreciation or use allowance will be based on acquisition cost. Where actual cost records have not been maintained, a reasonable estimate of the original acquisition cost may be used in the computation. The computation will exclude the cost or any portion of the cost of build- ings and equipment donated or borne di- rectly or indirectly by the Federal govern- ment through charges to Federal grant programs or otherwise, irrespective of where title was originally vested or where it pres- AC 150/5100-10A Appendix 4 ently resides. In addition, the computation will also exclude the cost of land. Deprecia- tion or a use allowance on idle or excess facilities is not allowable, except when spe- cifically authorized by the grantor Federal agency. c. Where the depreciation method is fol- lowed, adequate, property records must be maintained, and any generally accepted method of computing depreciation may be used. However, the method of computing depreciation must be consistently applied for any specific asset or class of assets for all affected federally sponsored programs and must result in equitable charges consid- ering the extent of the use of the assets for the benefit of such programs. d. In lieu of depreciation, a use allowance for buildings and improvements may be computed at an annual rate not exceeding two percent of acquisition cost. The use allowance for equipment (excluding items properly capitalized as building cost) will be computed at an annual rate not exceeding six and two-thirds percent of acquisition cost of usable equipment. e. No depreciation or use charge may be allowed on any assets that would be consid- ered as fully depreciated, provided, however, that reasonable use charges may be nego- tiated for any such assets if warranted after taking into consideration the cost of the fa- cility or item involved, the estimated useful life . remaining at time of negotiation, the effect of any increased maintenance charges or decreased efficiency due to age, and any other factors pertinent to the utilization of the facility or item for the purpose con- templated. 12. Disbursing service. The cost of disburs- ing grant program funds by the Treasurer or other designated officer is allowable. Disburs- ing services cover the processing of checks or warrants, from preparation to redemption, including the necessary records of account- ability and reconciliation of such records with related cash accounts. 13. Employee fringe benefits. Costs identi- fied under a. and b. below are allowable to the Page 7