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NOTE 1— SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />M. Land Held for Resale <br />Land held for resale represents various property purchases made by the City with the intent to sell in order <br />to increase tax base or to attract new businesses. These assets are stated at the lower of cost or acquisition <br />value. The City currently retains parcels that will be available for future commercial development along <br />Highway 10 now that the interchange projects on the highway have been completed in 2025. <br />N. Capital Assets <br />Capital assets, which include property, buildings, improvements, equipment, and infrastructure assets are <br />reported in the applicable governmental or business -type activities columns in the government -wide <br />financial statements. Such assets are capitalized at historical cost, or estimated historical cost for assets <br />where actual historical cost is not available. Donated assets are recorded as capital assets at their estimated <br />acquisition value at the date of donation. The City defines capital assets as those with an initial, individual <br />cost of $10,000 or more with an estimated useful life in excess of one year. Groups of similar assets <br />acquired at or near the same time for a single objective, with individual costs above $50,000, are also <br />capitalized as the cost is considered significant. The cost of normal maintenance and repairs that do not <br />add to the value of the asset or materially extend asset lives are not capitalized. Allowed by accounting <br />principles generally accepted in the United States of America, the City has elected not to retroactively <br />capitalize the infrastructure of its governmental activities acquired prior to January 2004. <br />Capital assets are recorded in the government -wide and Proprietary Fund financial statements, but are not <br />reported in the Governmental Fund financial statements. Capital assets are depreciated using the straight- <br />line method over their estimated useful lives. Land and construction in progress are not depreciated. Useful <br />lives vary from 15 to 50 years for buildings and structures and improvements other than buildings, 5 to 10 <br />years for office equipment, motor vehicles and machinery and equipment, and 20 to 50 years for water and <br />sewer lines and infrastructure. <br />O. Compensated Absences Payable <br />The City recognizes a liability for compensated absences for leave time that (1) has been earned for services <br />previously rendered by employees, (2) accumulates and is allowed to be carried over to subsequent years, <br />and (3) is more likely than not to be used as time off or paid in cash to the employee or payment to a health <br />care savings account during or upon separation from employment. Based on the criteria listed, three types <br />of leave qualify for liability recognition for compensated absences — compensatory time, vacation and sick <br />leave. The liability for compensated absences is reported as incurred in the government -wide financial <br />statements. The liability for compensated absences includes salary -related benefits, where applicable. <br />Compensatory Time <br />The City's personnel policy and union contracts permits employees to accumulate earned but unused <br />compensatory time, which are eligible for payment at the employee's current pay rate upon separation from <br />employment. <br />Vacation <br />The City's personnel policy permits employees to accumulate earned but unused vacation time, which are <br />eligible for payment at the employee's current pay rate upon separation from employment. <br />67 <br />