FIXED ASSET ACCOUNTING AND MANAGEMENT …

1 FIXED ASSET ACCOUNTING AND MANAGEMENT procedures manual Table of Contents REVISED December 2005 i Section 1 Organizational Responsibilities .. 1 1 Purpose .. 1 2 1 3 Scope .. 1 4 Responsibilities .. 1 5 Acquisitions .. 2 6 3 7 Retirements and Disposals .. 4 8 ASSET Inventory .. 4 9 Annual Financial Reporting .. 4 10 Records Maintenance .. 4 11 Definitions .. 5 Section 2 ASSET Valuation .. 7 1 Purpose .. 7 2 Scope .. 7 3 Guidelines .. 7 4 Valuation Terms .. 10 5 Valuation of Land .. 11 6 Valuation of Buildings .. 14 7 Valuation of Improvements Other than Buildings.

2 16 8 Valuation of Machinery and Equipment (Including Vehicles) .. 17 9 Valuation of Construction Projects in Progress .. 18 10 Self-Constructed Assets .. 19 11 Multiple-Unit Acquisitions .. 19 12 Make-Ready Costs .. 20 13 Multiple Funding Sources .. 21 14 Recording Valuation Information in the FAMS .. 22 15 Controlled Items .. 23 FIXED ASSET ACCOUNTING AND MANAGEMENT procedures manual Table of Contents REVISED December 2005 ii Section 3 Multiple Unit Assets .. 25 1 Purpose .. 25 2 Scope .. 25 3 Guidelines .. 26 4 Recording an ASSET 27 5 Recording a Group ASSET .

3 29 6 Recording a Component ASSET .. 30 Section 4 FIXED ASSET classification and Useful Lives .. 35 1 Purpose .. 35 2 Scope .. 35 3 Guidelines .. 35 4 General Procedure .. 36 5 Standard ASSET Descriptions .. 37 6 ASSET Class and Useful Life Table .. 38 Section 5 Numbering and Tagging FIXED Assets .. 43 1 Purpose .. 43 2 Scope .. 43 3 Guidelines .. 43 4 Tagging Methods and Placement .. 44 5 FIXED ASSET Identification (FAI)/Tag Numbering Systems .. 44 6 Tag Supplies and Inventory .. 45 7 Cross References in the FIXED ASSET MANAGEMENT System (FAMS).. 45 8 Location Assignment 47 9 Responsibilities for Assignment of Numbers and Tagging.

4 47 10 procedures for Assigning Numbers and Tagging .. 49 11 Replacing Numbers for Lost or Damaged 51 12 Sample 52 FIXED ASSET ACCOUNTING AND MANAGEMENT procedures manual Table of Contents REVISED December 2005 iii Section 6 Depreciation .. 55 1 Purpose .. 55 2 Scope .. 55 3 Guidelines .. 55 4 Assigning Useful Life and Salvage Value .. 56 5 Methodology and Calculation .. 58 6 Period Processing .. 59 7 Depreciation Adjustment Procedure .. 60 Section 7 ASSET Acquisitions .. 63 1 Purpose .. 63 2 Scope .. 63 3 Guidelines .. 63 4 Responsibilities by Major ASSET Category.

5 65 5 Responsibilities by Organization or Position Assignment .. 66 6 ASSET Acquisition by Purchase Order (PO) Procedure .. 68 7 Procedure for Recording Related ACCOUNTING Transactions .. 70 8 Verification Procedure for Assets Tagged and Recorded in the FAMS .. 71 9 Capitalization of Rolling Stock Procedure .. 71 10 Capitalization Procedure for Machinery and Equipment Purchased by Contract .. 72 11 Procedure for Recording Multiple FIXED Assets Acquired by a Single Purchase .. 73 12 Capital Leases .. 74 13 Grant Funded Assets .. 75 Section 8 ASSET Acquisition by Donation, Confiscation, Condemnation, Eminent Domain, Annexation, or Foreclosure.

6 79 1 Purpose .. 79 2 Scope .. 79 3 Guidelines .. 79 4 General Procedure .. 80 5 Donated Assets .. 82 6 Confiscated Assets .. 83 7 Eminent Domain .. 83 8 Annexation .. 85 9 Foreclosure .. 85 10 Assets in the Temporary Custody of the City .. 87 FIXED ASSET ACCOUNTING AND MANAGEMENT procedures manual Table of Contents REVISED December 2005 iv Section 9 Constructed Assets .. 89 1 Purpose .. 89 2 Scope .. 89 3 Guidelines .. 89 4 Responsibilities .. 91 5 Procedure for Accumulating and Tracking Construction Costs .. 92 6 Procedure for Placing Constructed Assets in Service.

7 93 7 Final Close-Out Processing Procedure .. 95 8 Capitalization of Interest .. 97 Section 10 Improvements, Betterments, and Maintenance .. 99 1 Purpose .. 99 2 Scope .. 99 3 Guidelines .. 99 4 Background for Understanding .. 101 5 Determining Whether to Capitalize or to Charge an Expense to Maintenance .. 103 6 Procedure for Recording Improvements and Betterments in the FIXED ASSET MANAGEMENT System (FAMS) .. 104 7 Retirements Related to Replacements and Renovations .. 106 Section 11 Transfer of FIXED Assets .. 107 1 Purpose .. 107 2 Scope .. 107 3 Guidelines.

8 107 4 Types of Transfers .. 109 5 Departmental Transfers .. 110 6 Interdepartmental/Interfund Transfers .. 112 7 Interdepartmental/Intrafund Transfers .. 114 8 Transfers of Assets via the Property Disposal MANAGEMENT Office (PDMO) .. 115 9 Transfers of Federal or Grant Funded Assets .. 115 FIXED ASSET ACCOUNTING AND MANAGEMENT procedures manual Table of Contents REVISED December 2005 v Section 12 Transfer and Removal of Surplus Property .. 117 1 Purpose .. 117 2 Scope .. 117 3 Responsibilities .. 117 4 Forms .. 118 5 Procedure .. 118 6 Property Redistribution .. 119 Section 13 Retirement and Disposal.

9 121 1 Purpose .. 121 2 Scope .. 121 3 Responsibilities by Major ASSET Category .. 121 4 Disposal Criteria .. 123 5 Disposal Methods .. 123 6 General Disposal Procedure .. 125 7 Disposal by Transfer to the PDMO .. 125 8 Disposal by Sale .. 127 9 Disposal by Trade-In .. 131 10 Disposal by Return to Supplier for Credit .. 131 11 Disposal of Stolen Assets .. 132 12 Disposal of Missing Assets .. 133 13 Disposal of Damaged, Destroyed, or Cannibalized Assets (Including Scrap) .. 134 14 Abandonment of FIXED Assets .. 134 15 Disposition of Federal and Grant Funded 135 Section 14 Physical Inventory.

10 137 1 Purpose .. 137 2 Scope .. 137 3 Responsibilities .. 137 4 Inventory Frequency .. 138 5 Conducting the Physical Inventory .. 138 6 Reconciliation Results and Actions .. 139 7 Reporting Final Results .. 141 8 Damaged or Defaced Tags .. 141 9 Grant Funded Assets .. 141 FIXED ASSET ACCOUNTING AND MANAGEMENT procedures manual Table of Contents REVISED December 2005 vi Section 15 Periodic and Year-End procedures and Records Maintenance .. 143 1 Purpose .. 143 2 Scope .. 143 3 Periodic 143 4 Financial Statements .. 144 5 Disclosure Requirements for Leases .. 145 6 Records Retention.