Agenda - Council - 11/25/2025 - Laserfiche WebLink

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City of RAMSEY CITY OF RAMSEY FIXED ASSETS POLICY For Adoption 11-25-25 PURPOSE: This policy document is to account for all capital assets. A capital asset is defined as the purchase of or improvements to — land, easements, buildings, building improvements, vehicles, machinery, equipment, works of art and historical treasures, infrastructure, and all other tangible or intangible assets that are used in operations and that have initial useful lives extending beyond a single reporting period (GASB 34). The following policy articulates the accounting practices and procedures that will ensure effective and accurate control of the City of Ramsey's capital assets. The policy will also establish the accounting framework for governing capital asset values in conformity with General Accepted Accounting Principles (GAAP), detail the custody and use of capital assets by the appropriate city departments, and provide data for long term planning of capital assets. I. Definitions Capital assets — for City purposes tangible or intangible assets with an initial cost of $10,000 or greater and estimated useful life more than one year. Tangible assets acquired together as part of routine replacement with an aggregate value of $50,000 or greater and estimated useful life more than one year. Considerations for routine replacement shall include but are not limited to: grouped replacements planned as part of the City's capital budgets, likelihood of replacing the assets together in the future, and classification of assets purchased together. Tangible assets have physical substance and include items such as buildings, land, machinery, and infrastructure. Intangible assets lack physical substance but provide long term benefits to the city. Current city intangible assets include permanent and temporary easements and purchased software. Capitalization is the process of allocating the cost of an asset over its estimated useful life. Depreciation - the gradual conversion of the cost of a tangible capital asset into an operational expense over the assets estimated life. Straight Line Method Depreciation - Property, plant, and equipment are depreciated using the straight-line method which allocates the cost evenly, less residual value, if any, over the life of the asset. The city currently uses the Full Year Convention which gives the asset an entire year's depreciation in the first year of service irrespective of the date placed in service.